The Axemen Cometh

This article appeared in the Sydney Morning Herald on November 1, 1997.

It has stood the test of time as an insight into the Howard government’s approach to the public sector.

After serving as head of the Department of Prime Minister and Cabinet, Max Moore-Wilton went on to be chairman of the Sydney Airport Corporation Limited.

Text of article from the Sydney Morning Herald.

They call him Max the Axe – and a lot more that’s not printable. With the help of other like-minded men, John Howard’s chief bureaucrat is radically changing the philosophy and practice of Australia’s public sector – and the role government plays in our lives. JODIE BROUGH and MICHAEL MILLETT report.

On his first day as the chief executive officer of the Maritime Services Board, Max Moore-Wilton drove into the building’s underground car park. There he encountered a uniformed man who stopped him from parking in the space closest to the lift.

“You can’t park there,” the attendant said.

“I’m the new chief executive,” Max responded.

Maybe so, the man said, but that’s not your space, directing him to park in another spot.

Max complied, then went up to his office and picked up the phone. His first action as the new boss was to sack the car-park attendant.

The incident, and its delighted retelling by “Max the Axe”, reveals that the Prime Minister’s chief bureaucrat is not your stereotypical grey-suited Canberra public servant. Bureaucrats are renowned for their hesitancy. And their professional reserve. Not Max.

Soon after John Howard appointed him to head the Department of the Prime Minister and Cabinet, Moore-Wilton is said to have startled his senior officials by flicking at drab curtains in a departmental meeting room and remarking: “These curtains are grey and boring, just like most of the people in this room.”

Moore-Wilton’s blunt approach – one bureaucrat described his style as “like fingernails drawn across a blackboard, designed to attract attention” – symbolises the transformation that has occurred in the Public Service since the advent of the Howard Government.

In the 19 months since the Coalition came to power, the very foundations of governance have been altered, probably for good. The Public Service is now dominated by what one Liberal insider describes as an “ideological official family” of hard-nosed bureaucrats whose unabashed embrace of the Government’s agenda has catapulted them to the centre of power.

The new breed personifies qualities the Howard Government plans to enshrine in controversial legislation now before Parliament, fundamentally changing the nature and mission of the Public Service. They are managerialists and economic rationalists with a mixture of public-sector and private-sector experience. They are believers in radically smaller government, where most government services are delivered by private operators and where the “red tape” of accountability is kept to a minimum.

It would be a mistake to label them “new mandarins”, for these bureaucrats are a world removed from the knighted pillars who ran public administration (and some would say governments) from the cosy confines of the Commonwealth Club. The old Public Service was dominated by figures such as Sir Frederick Wheeler, H. C. “Nugget” Coombs, Sir John Bunting, Sir Arthur Tange, Sir Geoffrey Yeend and Sir Lenox Hewitt – “permanent heads” whose influence outlasted those of the ministers they served.

Moore-Wilton typifies the new generation, self-styled CEOs anxious to break the Public Service from what they perceive to be its cobwebbed past and adopt the culture of the commercial world.

The other critical Howard appointments combine Public Service backgrounds with direct political connections. Peter Boxall, the Secretary of the newly constructed Department of Finance and Administration, is a former Treasury official who came from Peter Costello’s office.

The Cabinet Secretary, Michael L’Estrange, is another longtime Liberal staffer, originally from the Department of Foreign Affairs. His job, traditionally held by the Secretary of the Department of Prime Minister and Cabinet, has become a hybrid which combines the public servant’s properness with the political staffer’s savvy. He is Howard’s much-valued link with the bureaucracy.

These men represent “Washminster” – the combination of old-style Westminster governance where public servants operate at arm’s length from the elected politicians, and Washington’s system where all senior jobs are political appointments, spilled when the presidency changes hands.

None of the old-style mandarins would boast a CV quite like his modern-day successor. Moore-Wilton, adopting a “have gun-will travel” approach, has fulfilled assignments in a variety of Federal and State government organisations, eventually leaving a senior post at the Australian Stock Exchange to join the Howard team.

The Axe nickname dates to Moore-Wilton’s job-shedding efforts at the then Government-owned Australian National Line and his stubborn insistence on cutting numbers, drawing him into direct conflict with the Labor Government.

The severity of the cuts to Federal Public Service numbers after the election – 11,000 jobs, or 8 per cent of the workforce, gone and more to come – has only enhanced the “Axe” image, cementing Moore-Wilton’s reputation as a decisive and smart operator who delivers the demands of his taskmasters.

He has already left his mark in Canberra. By aggressively contracting out services, mega-departments such as Employment, Education, Training and Youth Affairs have become shells of their former selves. Many of the cuts have appeared vengeful attacks on unpopular agencies such as the Office of the Status of Women.

The critics say Washminster is delivering a compliant and highly politicised Public Service in which appointments are based on favouritism and ideology. Under this system, public servants can expect to pay a high price for their ministers’ failures – witness the carving up of the Department of Administrative Services in the aftermath of the travel rorts affair.

Howard used to lash Labor for stacking the Public Service with those it saw as mates. That has not stopped him from taking personal control over appointments to government bodies to ensure Coalition friends are in charge. Howard is admired and maligned for furthering a culture which had its origins in the Hawke-Keating Labor Government’s promotion of managerialism and abolition of permanency for department heads.

He moved quickly after the 1996 election, dumping six department heads (the biggest single change in the history of the Federal service), tearing down department structures and levering L’Estrange into the new Cabinet Office.

Howard now has an unusual band of bureaucratic advisers – some drawn direct from the public sector (Moore-Wilton and Paul Barratt, the former chief of the Business Council of Australia who now heads Primary Industries and Energy); the political appointees (L’Estrange and Boxall) plus those who have survived the transition.

They include Allan Hawke, a former adviser to Keating who heads Transport, Steve Sedgwick in the mega-department of Employment, Education, Training and Youth Affairs; and Ted Evans, who runs the powerful Treasury Department.

Their survival of the purge can be attributed to the practical reality that the Public Service would be unmanageable if stripped of any more of its corporate memory and experience.

Speculation persists that further changes to the top may be in store. The Government’s overhaul of the Public Service Act, giving the Prime Minister total control over the hiring, firing and remuneration of department heads, adds to the volatility.

Halfway through the Government’s first term, there is still palpable distrust between some ministers and their departments. The enthusiasm displayed by several ministers in seeking policy advice from external sources, such as conservative think-tanks and consultancies, confirms the tension.

The contrast between Moore-Wilton and his predecessor, Dr Michael Keating, could not have been greater. Keating, a lifelong public servant, was loyal to his department and his vocation to the point of prickliness. Moore-Wilton, the corporate-style swashbuckler, has delighted in public criticisms of the bureaucracy’s deficiencies. Privately, he has told his bemused officials that they would be better off in the private sector.

At a diplomatic function last year, Moore-Wilton appalled long-serving bureaucrats by critiquing the deficiencies of Public Service reform under Labor as Michael Keating looked on. Moore-Wilton made a special point of attacking his predecessor’s reform efforts, much to the embarrassment of Keating, other diners and the diplomatic hosts.

If Howard wanted to “shock” the service into change, then Moore-Wilton is determined to achieve it. To quote one senior Liberal: “The Public Service needs an enema and Max is administering it.”

But the transition has raised many questions about the Government’s apparent view that accountability is a second-order issue, particularly as it moves to outsource and privatise its services and businesses.

The Government found itself under fire earlier this year when an IBM subsidiary won a contract to provide information technology services to the Department of Finance without a tender, prompting claims that the deal lacked transparency.

Earlier this year, it was revealed that Moore-Wilton had intervened in a tender for the outsourcing of five business units within the Australian Government Publishing Service. A book publishing company represented by former Coalition leader Dr John Hewson was allowed to put in another bid after Moore-Wilton told the bureaucrat in charge of AGPS that there was “merit” in reopening the tender.

Moore-Wilton’s views on outsourcing have become the subject of bitter controversy in Public Service circles. He has argued for opting out of service delivery altogether, suggesting that outsourcing would relieve the Public Service of the expensive albatross of accountability.

The Commonwealth Ombudsman, Philippa Smith, rejects that notion: “I think it’s a nonsense to say the maintenance of standards is too costly. If you don’t maintain standards then you could end up paying more for less.”

Moore-Wilton declined the Herald’s written request for an interview. But old friends such as the head of the ACT Government Service, John Walker, an old NSW colleague, speak highly of the man and his ability to steer the Public Service into a new era. Walker says that when Howard approached Moore-Wilton before the election to sound him out, Moore-Wilton was about to undergo surgery for bowel cancer.

“Max said to me that he’d decided it was time to give something back,” says Walker. “I admire him for that.”

An economics graduate, Moore-Wilton, 54, was originally a Department of Trade official, a protege of the Country Party leader “Black Jack” McEwen. His rise was rapid; he was reportedly the youngest ever first assistant secretary in the Federal Public Service.

Despite his mentor’s “agrarian socialism” and the regulatory mindset of the agricultural bodies on which he worked, Moore-Wilton has adapted his views to the prevailing political and economic climate, becoming a fierce advocate of deregulatory policies.

One of his admirers said: “The thing he’s got contempt for is all the regulators – auditors-general, equal opportunity, human rights commissions, all this bloody overlay that you’ve got to go through which really impedes people’s ability to be able to be told the way things are and get on with things.”

Moore-Wilton’s combative style, say his detractors, is more like that of a 19th-century industrialist who treats his department as a personal fiefdom. They paint him as a bully who shocks his staff with outrageous comments and pounces on those who do not measure up to his standards.

When it emerged that a middle-ranking bureaucrat in Moore-Wilton’s department had known details of former minister John Sharp’s travel allowance repayment, a livid Moore-Wilton made an appearance in the official’s branch. The official took the extraordinary step of resigning over the matter. Moore-Wilton’s reaction to the branch’s distress was to counsel that grieving was one thing and sympathy another.

But a former colleague says he is a charismatic player: “He fills the room. He’s fairly skilled at dealing with ministerial advisers and political policy advisers, but he doesn’t mind pushing them aside if he believes that it’s not going the right way.”

His admirers include Peter Sams, the secretary of the NSW Trades and Labor Council whose policy views are almost diametrically opposed to Moore-Wilton.

The two worked together closely on the Maritime Services Board. “I quite liked him actually,” says Sams. “He has a fantastic sense of humour, he’s very convivial. But he is also totally on top of everything he is doing.”

Sams also questions the Axe image. “During his time at the MSB we undertook some huge reforms, reducing the number of employees from 3,000 to 600 and at no stage did it involve mass sackings.” Senior figures in the Carr Government expressed regret at his departure from the NSW Public Service, advising him he would be “welcome back anytime”.

Admirers point to his networking skills, his political instincts and his ability to deliver “effective” political and policy advice.

Moore-Wilton’s negotiation skills are legendary. Several years ago, he meticulously planned for a series of meetings with Commonwealth officials to be held in a room facing west on summer afternoons. The air conditioning was turned off and Moore-Wilton sat facing away from the windows so that the opposing negotiating team had to squint into the glare. After a few hours he would have a hot meal served, while cups of coffee were brought forth at regular intervals. The tactics worked and the deal was done quickly.

He is also, undeniably, a character. One associate described him variously as an ace poker player, a bon vivant and a raconteur. A senior State public servant recalls Moore-Wilton theatrically rebuffing demands for inclusion of a contentious item on a conference agenda, telling officials: “This is dialogue of the deaf.”

In another use of theatre at the height of his bitter industrial dispute with the unions at ANL, Moore-Wilton took the provocative step of appearing on the docks, stalking up and down alone in defiance of warnings that he was likely to be attacked.

During the same period, a wall was built around his Melbourne home on security advice. Rather than being appalled at the perceived threat to himself and his family, Moore-Wilton later said the wall’s construction gave him a tidy profit when he sold the house.

Arriving back in Canberra, the new boss wasted no time in introducing his free-market, small-government, economics-focused ideas to his department. At one of his first meetings with Senior Executive Service (SES) staff, Moore-Wilton castigated them for being too preoccupied with minorities and the disadvantaged. They should be looking at policies which did the greatest good for the greatest number, he told them. This philosophy dovetails with that of his paymasters, but does little to bolster the hopes of those who believe the role of government is to step in when the free market doesn’t work.

Moore-Wilton’s embodiment of the Washminster ideal keeps landing him in trouble. On a number of occasions, he has fuelled criticism that Washminster is an unhealthy merging of elected and unelected officials.

His views on accountability and Public Service advice have proven especially controversial. In August, he told a Public Service audience that he was frustrated by the maze of accountability requirements in Canberra, declaring himself “bemused and amused” by the lack of trust in agency heads to do their jobs.

He decried “this business that we need somehow or other to have Parliament or the Clerk of the Senate or someone in a university write a set of rules to make sure that you never, ever show any signs of individualism”.

This led John Gorton’s one-time departmental chief, Sir Lenox Hewitt, an avowed opponent of the new Public Service Bill, to suggest Moore-Wilton was “out of his mind”.

The usual protocol is for public servants to bear criticism in silence, but Moore-Wilton hit the radio airwaves to accuse the emeritus mandarin of being an irrelevant old man whose views were “so old-fashioned, so second-rate and so untransparent that it would totally be abhorrent to the people of today”.

Hewitt’s view, which reflects that of many public servants, is that the bill will destroy frank and fearless advice by making all senior public service jobs effectively political appointments. He argues that only a truly independent Public Service can safeguard public interest by telling the politicians the truth rather than what they want to hear.

Moore-Wilton rejected this in idiosyncratic style: “Frank and fearless seems to have been given some sort of particular status, a bit like Frank N. Furter. I think frank and fearless in some people is a sign of hubris and stupidity … and there are a number of people who have confused frank and fearless with just being a bloody nuisance.”

HOWARD has been determined to strip out structures which, in his view, interfere with government power, such as quasi-judicial bodies favoured by Labor.

In a letter to ministers last year, Howard said he wanted to get rid of as many statutory authorities as possible because they limited “governments’ own sphere of control and constrains the options available to them”.

This was taken to heart by Moore-Wilton. When an inter-departmental committee was looking at ways of streamlining the Administrative Appeals Tribunal, Moore-Wilton simply hijacked the process, demanding that Cabinet adopt a private-sector-style model which would make the AAT answerable to the departments it was investigating. Only the insistence of the Attorney-General, Daryl Williams, stopped the plan going ahead.

In addition, Moore-Wilton’s obsession with leaks and his pursuit of less senior public servants “tainted” by association with Labor, has opened wounds in the bureaucracy. Critics claim he has engendered an atmosphere where public servants do not give frank advice.

His Labor-era deputy, Dr Meredith Edwards, was edged out in June after Moore-Wilton had made a point of telling Howard at a social event that her father, a former top public servant, had once stood as a Labor candidate decades before.

All these incidents have exposed the limitations of Washminster, according to those observers who are implacably opposed to the Howard/Moore-Wilton model.

Moore-Wilton’s personal style has also been a source of bitterness around Canberra. He has complained privately, with some justification, of an “entitlement mentality” among public servants used to the security of a job for life. Yet his own behaviour has raised questions.

He came to Canberra with a reputation for extravagance on the public purse, having spent $600,000 on redecoration at the NSW Roads and Traffic Authority.

But in March it was revealed that he had approved for himself an additional tax-free accommodation allowance of $17,000 a year because he was technically still a resident of Sydney. The $330 a week allowance is three times the level recommended by Public Service guidelines. Taxpayers also funded a tax-free travel allowance and even meals and furniture for his Canberra apartment.

Moore-Wilton’s basic salary is just over $150,000, with allowances and perks taking the total package to about $210,000 a year. Moore-Wilton has said openly he believes he and the other department heads should be paid more.

All secretaries’ pay is set by the independent Remuneration Tribunal. The tribunal, acting at the urging of the secretaries, has tried a number of times to have it bumped up, without much success.

Now the Howard Government is trying another tack. Its new Public Service Bill, before Parliament, gives the Prime Minister the power to set the salaries of the department heads, with the heads, through individual contracts, setting salaries for executives immediately below them.

The contracts are confidential, giving the Government the ability to ratchet salaries up without public scrutiny. The Government’s defence is that budget constraints will keep paypackets in check.

But some movements appear inevitable, if only to address the gap between salaries in the Federal sector and those applying in State jurisdictions. Packages of over $300,000, topped up with productivity bonuses, are now the norm in States such as NSW and Victoria.

Already, senior executives below the rank of secretary are taking advantage of the new contracts to tailor combinations of direct salary and perks to reduce their tax “risk”. While the Government is cutting a swathe through the numbers of lower- and middle-order public servants, those executives able to survive the axe are doing quite well – if at much higher productivity levels.

The pay reforms will enable the Government to avoid the political gyrations necessary to get Moore-Wilton on board. Last year, it was revealed that Howard had allowed his new department head to keep two part-time jobs with Victorian government authorities worth $80,000 a year, raising accusations of conflict of interest. He later resigned from the posts.

Moore-Wilton’s own comment on Public Service remuneration is typically acerbic: “I doubt if anybody that is in a senior position in the Public Service in Australia is motivated totally by the financial reward. Equally I don’t think it necessarily means that you have to enter a monastic order and flay yourself every evening.”

Despite the predictions that his brave new world will undo the Public Service, Moore-Wilton has made no apologies for his approach and the Prime Minister has backed him all the way.

Moore-Wilton does not accept complaints that his model is less accountable, painting the changes as necessary and desirable. He warned public servants recently that they needed to avoid the “creeping denigration of our role in society”.

“What I would hope we are doing, in a way, is freeing up the vigour and the individualism in the public sector to show that we can lead the way … we have to free up our creative ability,” he said.

Predictions suggest that, assuming the Coalition survives its mid-term slump and reclaims government next time around, it will be Michael L’Estrange and Peter Boxall leading PM&C and Treasury as the inheritors of Moore-Wilton’s shock tactics.

If that happens, the Washminster revolution will have been well and truly won by the new breed. Then there will be no turning back.

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