Leadership in Australia – Accountability, Authority, Capability and Shareholder Expectations

Over several decades of consulting, issues of accountability, authority and capability have been integral in the formulation and provision of our advice to both private and public sector entities.

While acknowledging that differences exist between both sectors, recent events have highlighted a number of sub-optimal outcomes within the public sector which are impacting on many of their stakeholders, i.e. the Australian citizen.

I believe the cause of a number of  these failures  relate in particular to where either legislation or the shared allocation of accountability across layers of government have interleaved unfavourably from an ideological bias.

The challenges of bushfires, droughts and floods have been a recurring challenge for governments at all levels in recent years.  In 2020 COVID-19 has emerged as a unique challenge for both State and Federal bureaucracies and has required an entirely different approach to that taken when compared  to natural disasters.

Management of the COVID-19 challenge has produced varying degrees of success, particularly as Federal and State governments have engaged in managing the challenges under a Morrison government-initiated national cabinet.  A by-product of this initiative is the highlighting of ambiguities in shared accountabilities between State government departments and the Federal government.

Based on my own experience over more than three decades of defining the accountabilities of key public sector employees and/or retained resources, I have observed in some settings where legislation has held a Minister to account in providing support for the community while in other settings a government department or statutory authority is held accountable for key decisions and resource allocation in specific areas of government engagement.

In some areas of government oversight local governments have a shared accountability with State governments and provide resources to support more localised communities with varying degrees of effectiveness.

Governments have, to varying degrees, established parameters for the governance of enterprises in regulating the private sector through legislation and through engagement with various centres of influence including the Business Council of Australia, the ACTU, Chambers of Commerce, Unions and industry representatives.

The Australian Securities Exchange have required listed organisations to disclose the capabilities and experience which key management personnel (KMP), particularly directors, are required to possess and to disclose these details to shareholders on an annual basis.

At the time of  elections for Public Office current members and candidates of Federal, State or Local government entities are not subject to such public scrutiny or constituent appraisal.  There is, in fact, a conspicuous absence of any requirement for the public disclosure of these individuals’ capabilities,  experience and skills relevant to the Office they are seeking.

The challenges for those in public office who are required to simultaneously manage finite resources deployed to support Australia’s citizens, while also adopting or adhering to best practice at least cost for the benefit of all Australians, cannot be underestimated.

While the leadership of public sector organisations are influenced by Party ideology, the leadership of private sector organisations at both board and management level are also influenced by key stakeholders including investors, suppliers and customers whose expectations will often be driven by anticipated benefits of a commercial or ideological nature – the latter increasingly influenced by activists.

Given the challenges that are continuing to arise in government in its oversight of health, education, energy, water resources and agriculture, together with industry, infrastructure and the environment in its widest sense, the time has come when there should be more disclosure exercised at all levels of enterprise in public and private sectors in regard to the skills and capabilities of both its elected officeholders, bureaucrats and corporate executives.

Such disclosure must be sufficiently persuasive and substantive to enable the wider community to participate in the processes of appointments and elections which are reflective of the best possible choices. Citizens, shareholders and community stakeholders need to be assured that enterprises upon which they depend are well led, appropriately resourced and provide timely, transparent disclosure of their effectiveness with integrity.

Australians are compelled to rely on the competence of the various levels of government to exercise the requisite standards of authority and leadership.  Are our citizens therefore entitled to more comprehensive disclosure than is presently available in relation to the key capability requirements of those officeholders who are required to exercise this authority and provide empathic leadership?

If so, a useful commencement of this process could be the comprehensive disclosure of the role and obligations of members of parliament, ministers in parliament, the Prime Minister, Premiers and Mayors.

Such disclosure would enable communities to make well informed decisions as to the competence and capability (or otherwise) of their elected officeholders to meet their obligations to them as constituents, and to function competently in the execution of the officeholders’ broader accountabilities.

Wherever accountability for health, education, defence, infrastructure, international engagement, energy, community welfare or the deployment of both financial and natural resources rests with elected officers, there are very onerous obligations which demand relevant capabilities and experience of the elected officers.

If the primary obligation rests with senior executives, professional and administrative staff managing the deployment of government services and resources, then clarity of accountability and capability standards should be widely disseminated.  The Brereton inquiry into Afghanistan war crimes commissioned by Defence will under review by the Courts highlight leadership’s accountability oversight in the theatre of war

In any event, it would be highly beneficial for Australians to have the opportunity to examine and consider clear statements of capabilities and experience of those offering themselves for election to all levels of public office.

Similarly,  a clear statement of capabilities and accountabilities should be disclosed before any member of elected office assumes a ministerial role so that the community can have confidence in the quality of leadership within government and the knowledge of where the authority for decisions lie and where accountability rests.

These observations represent my initial thoughts and are also the first in a series of papers which I plan to produce in the months ahead. Future commentary in this series will address federal government accountability at ministerial and department secretary level.

While the above article has as its primary focus the oversight of accountability and authority in the public sector the Hayne Royal Commission into the financial services sector and other recent observations regarding the stewardship at both board level and executive level in the private sector, has also raised shortcomings, which boards are progressively addressing in meeting appropriate standards of governance and satisfying the demands of shareholders and key stakeholders, often highlighted by proxy advisors and other commentators.

A future article will comment on these issues.