Colour head shot of Katy Gallagher, current Minister for Finance.

Senator the Hon Katy Gallagher

Minister for Finance

In conversation - AFR Government Services Summit, Canberra

Minister for Finance
Minister for the Public Service
Minister for Women

Digital ID; Consultant use in the APS; PwC; Robodebt; APS Bargaining.

TOM BURTON, HOST: We've got Minister Gallagher here, Katy Gallagher, most of you know her. She is a local ACT Senator. She was the Chief Minister here and she's seamlessly evolved into the Federal level. You don't often see that, sometimes you see people move from State and Territory level up to Fed, and they don't quite make the grade. I think everyone would agree that Minister Gallagher has certainly made the grade. She's Minister for Finance, she's Minister for the Public Service, she's Minister for Women. So that probably covers about everything and there's probably a few other things in there, in her portfolio. In the interest of time, Katy, we might just jump straight into it if that's okay. Digital identity that we heard Professor Dominello out there talk about digital identity being the spine of digital government, and the key role it plays. Let's talk – what's the roadmap look like for you around digital identity?

KATY GALLAGHER: Yes. Thanks, Tom. Thanks for having me here. And firstly, Professor Dominello, lovely to see you. And Danny Pearson also here, Victorian Minister who I had the opportunity to chat with. Look, I get that Digital ID is the main game certainly once I took the portfolio, certainly Ministers from the State and Territories were in my ear about this being the single, I guess, program or project that they wanted to see dealt with quickly. So, we've been doing a fair bit of work, you know, a lot of the work. Which this program had been going for years, frankly, but it hadn't got to a point where we needed to start consulting and really getting down into the details. So, we've got cabinet approval, basically for the next stage, which is to have an exposure draft come out in the next little while, hopefully by September. Being able to consult on that exposure draft. I'd like to get it into the Federal Parliament this year if that's possible. I think that's important because no doubt it will undergo a bit of a committee process through the Parliament, particularly in the Senate, I expect where it is contested territory. And then, you know, if all things line up and we're able to move pretty swiftly, we could have legislation in place, mid-year next year. That's a pretty tight timeframe, so I don't want to be held to that. But that's kind of my roadmap.

BURTON: And the brave question is when do you think it could go live? When will citizens start feeling it? Seeing it?

GALLAGHER: Well, potentially, you know, that mid next year. I mean, in many ways, what we’re doing is enshrining in legislation a system that's unregulated now, so we have, and Bill may have said this this morning, you know, we've got over 10 million people using myGov ID. States and jurisdictions are developing their own systems as well. So, I think from the everyday person's point of view, we've got the system it's just not regulated and not in a shape I think that will allow us to drive it forward and give the interoperability and the economy wide benefits that come from having a national system, but we're very committed to it. I would say I think it will be a bit contested so we're doing a fair…

BURTON: In what way?

GALLAGHER: Well, you know, I think there's already and others may be getting this certainly other Ministers may be getting this, there is already push back, I think and petitions circulating about what it's not, you know, about making sure. So, running, you know, we've seen this, particularly coming out of COVID you know, theories, conspiracy theories about what government's trying to do. So, I think we do need to be very clear in our communication about what this is. It's not a number, it's not a card, it's a whole range of things that it's not which will be argued that it is. It's really about you having control as citizens; control of their information that allows them to access government systems in a very easy, secure, voluntary and efficient way. But you know, I'm going in with my eyes open that there's a fair bit of work to do on this and hopefully bipartisan support.

BURTON: Right, because a lot of observations is that proper ID system helps privacy because you're handing over buckets of information to real estate agents or hubs or whatever.

GALLAGHER: Yeah, absolutely. So, I think it's more about dealing. Being able to be very clear about what we are doing that it is citizen centred, it is about securing your information and protecting your information and ensuring that you know, when that information is shared, it's done under a regulated system and that there are options so we're going with the ACCC as the regulator in the first instance, that's an in a sense an interim regulator, but they do across the Federal government, they have the most experience in dealing with you know, consumer issues across the economy. But I would imagine that as the system develops, and as there's more digital and data interaction and sharing going on across the economy and across governments that this would grow into a digital specific regulator.

BURTON: Okay, that’s an interesting concept because we've got the Commonwealth involved in cyber, it's involved in AI, it's involved in scams. Do you see a roadmap eventually to try and consolidate those into one place?

GALLAGHER: Potentially, I mean, we just didn't want to get distracted by having to develop up an entirely new regulator whilst we're doing this work, when we've got the ACCC, it's trusted and trust is part of the work that we have ahead of us. It's got very strong brand recognition; people understand what it does. They understand it has powers that it does pursue matters, whether it be through competition or consumer rights. It's got some responsibilities around scam, consumer data rights those kinds of programs. So, in the first instance, we think that out of all of the options we looked at, that was the most sensible way to proceed in the first instance, before we develop into I would imagine as the system evolves, we're going to get much more we’ll have to have some sort of digital data regulator speciality, because it won't just be digital ID, I think, you know, it's hard to imagine where we're going to be in five and ten years with these matters.

BURTON: The digital identity model is very much a federated model of private public sector pairs, are you still committed to that ecosystem, that it'll be the spine for both private and public interaction?

GALLAGHER: Yes, yes. So, we want to see an economy wide system. And in a sense, we've got that operating now, without regulation. We've got some digital, private digital ID providers and then you've got myGov. So, this is really, I think, we're going to attack it in, we're going to implement it in phases. And I think our first, once we've got it up and running, the next stage is to really make sure that the State and Territory digital ID systems are interoperable, and then move to the private sector. There's still some detail which I think will come out during the consultation. So, on the exposure draft, I'm really keen on getting that out as soon as possible so we can get all of the feedback to shape what the actual legislation looks like when it goes into the Parliament.

BURTON: Because we had draft legislation before. Do you see big changes in terms of the exposure draft or is it just a refinement on the previous draft?

GALLAGHER: Look, I think it's a bit of a refinement, obviously things like the regulator are new so that will come in, but I think we've done a lot of work inside government. I think the exposure draft gives us the opportunity to go out more broadly, the DTA and Finance; DTA has done a lot of the work, Finance are working alongside as you would expect, and so we have been doing specific pieces of consultation as we've been developing it but I think the exposure draft will give people a bit more, well, it'll give you not just a bit more it will give you insight into the work we've been doing.

BURTON: Let’s switch topics - consultancies, a lot of them here in the room. And I've been on record saying I think the mania about consultancies might have gone too far. What are your thoughts on how we get this balance between consulting and public sector and that partnership relationship?

GALLAGHER: Yeah, I think I've been saying even from Opposition that I felt that it had become out of balance, that there was a under the former government, you know, a combination of policies that had led to a much greater role for consultants in the public service than perhaps is ideal and that's not really any fault of the consultancy sector, that's decisions that had been made. So, things like the ASL cap, which is very Canberra speak, but average staffing level cap, which meant that departments couldn't employ people to do the work if we went over a certain level, meant that the only way to get that work done was to buy in external labour, whether it be consultants or labour hire or contractors. So, there is a rebalancing that needs to happen. Obviously, the PwC issue has really brought this to the front and has got more interest in this area and space than you know, I think I've seen in my lifetime, and that's the way the media operates at the moment. Once you get an issue like that, and it can keep going and going and building. But it's changed some of the response immediately in and around procurement. But in terms of the rebalancing, we're just continuing on the path that we really set in Opposition and we're following through with that in government.

BURTON: And how do you get that? I think it was Peter Walcott who said you know governments got to be a better procurer of these services. How do you get that? How do you make government better because there's a lot of duplication. There's a lot of bad arrangements put in place for projects that should have been done by core, at core levels. How do you start making government a better procurer of consultancy services?

GALLAGHER: Yeah, so there's a couple of things there. One, you resource the public service to do the job that you're asking it to do. So, people will have seen in the October and May Budgets there was additional ASL going into departments and I know that can be contested at times, you know, I'm a Canberran and so I get the whole ‘Fat Cat Canberra’, you know, ‘jobs in Canberra’ ‘Canberra bubble’ all that where a lot of the public service jobs are actually outside the Capital, but you've got to resource your public service properly. So, we've done that there's been significant ASL uplift in a range of departments where they were under huge pressure whether it be Environment, Services Australia, Veterans’ Affairs, the Aged Care Quality Commission, all those areas. So…

BURTON: These are sharp increases, though. We're now going to have a public sector 190,000 big. That was a few years ago, 155. That's a big jump…

GALLAGHER: Except when you look at the Audit of Employment, which we did when we came in, that was one of our commitments. When you ask, how, how big is the APS? Nobody could answer because there was a workforce of 50,000 or more that was external labour, whether it be labour hire, consultants, or contractors. And so, I'm not sure it's like we'd like. We have in some of these areas, what we've done is continue funding for public servants that were funded for a year or you know, for two years, like in the environment area, and this has an impact on the economy in the environmental approvals, if your environmental approvals unit that's doing a lot of that work, you know, is under resourced or on short term contracts, you're not actually going to get the workflow through that the private sector relies upon. So, there was real impacts, you know, real life impacts across how that was done. So resourcing is right, looking at the procurement rules, which we've done, making sure they're tight. And the third thing I think, which is work that Gordon's doing, Gordon De Brouwer with the Public Service Reform Unit is the commissioning, the strategic commissioning framework. So, having the Public Service understand what it is they need and how they purchase that or procure that. So that's another arm which is underway now and that I think the other one is this into the, you know, the consultancy model that we're looking internally the in-house consultancy model which again, is going to have an educational role for departments about when to when to buy in those services. I think in the, in my experience coming into the Commonwealth government there has, there's a culture that had grown of ‘if you need something done you buy it in’ and we have to start changing that because that was ‘you buy it in even if it’s core public service work’, not if it's, you know, specialty work or technical advice or one off information or specific project and I've met with a lot of consultants, who actually agree with the reform we're doing because they don't, I mean, the reason they are they've gone out into the consultancy world is because they don't want to be public servants doing that job. They actually want to be utilised for their expertise and skill. So that's underway as well.

BURTON: And how? Because the consultancies bring a broad base of knowledge which often is their strength, yet there's been calls for structural separation, etc. How do you balance those two pieces?

GALLAGHER: Yeah, so I've had been asked this and I haven't formed a settled opinion on it. You know, I understand that when things are being contested in the media you know, people want responses immediately. The Senate inquiry is having a look at some of these issues now. I think we need to let some of that work through, I think they'll have a view on, you know, regulatory responses. They'll have a view on structure, I think, pretty sure from just watching how it's going. I think one thing we have to be careful of is that one of the benefits of engaging consultants is using their broad range of knowledge and expertise across their organisation. That is what is useful, often in terms of what's being asked of them. And if you limit that, you know, it could challenge how useful they are, like if you can't go across to another unit in your organisation to ask them a question about some work you're doing, say in health and you go and speak to somebody in the international area, then that could challenge the advice you get, but I haven't got a, and the government doesn't have a formal view on it.

BURTON: And there’s the risk that, there's been a lot of observations about too much, the balance is wrong. But is there a risk that the government seems to be you know wanting just to take its own advice and it becomes too insular? The whole APS reform piece is about opening the public sector up. Canberra has been, excuse me putting in these sort of geographical terms, but it's always been considered quite an insular public sector and all of sudden, we're sort of demonizing external advice. Is that a risk?

GALLAGHER: Well, certainly it's not our intention. I mean, public sector reform is all about building the capability across the APS making sure it's citizen centred, a model employer and transparent and accountable and is driven by integrity. So that's the kind of the approach and part of that is partnerships, like genuine partnerships, not just partnerships based on a procurement model, but how you work with communities, with business, with civil society to actually deliver the services that the Australian people want. And so, you know, the first bill that's gone through the House that will come to the Senate is really about setting out that framework and making the public service tranche more transparent and accountable; capability reviews, census, publishing census data, enshrining a purpose to the APS which you know, doesn't exist at the moment. All of that is about shaping it up and protecting the institution but having it looking outwards, not inwards.

BURTON: PwC they've split off their advisory business. Does that give you confidence that they've moved on and is the Federal Government ready to let them back out of the dog house if I can use that language?

GALLAGHER: Well, you know, that remains to be seen, in terms of their own approach. The procurement rules are the procurement rules. So, nobody has been, you know, removed from being able to seek contract or seek work with the APS. But we have reinforced, you know, important principles that already existed about ethical conduct. I think there is a huge piece of work for the central agencies in particular to, you know, work through some of the, I guess some of the issues that have been highlighted by the PwC issue and you know, they're real, you know, conflict of interest matters, you know, sharing of information, retaining of data. I mean, there are a whole range of issues that, you know, the government needs to think through carefully in our response, but nobody's been black banned or you know, anything like that. The procurement rules are the procurement rules.

BURTON: But we do have a federal police investigation going underway. It's fairly hard for agencies to suddenly say ‘we want them back again’ while there's still these sort of black clouds hanging over them.

GALLAGHER: Well, there are I mean, there are those processes underway, but there are contracts in place with PwC that exists across government as well and they are fulfilling those as far as I'm aware.

BURTON: Let's switch to Robodebt. It's obviously a topic everyone's interested in. But what were some of your bigger takeaways from that report? And if you like the overall…

GALLAGHER: Well, I think with my APS hat on, it's confirmation that the APS reform work is important, and that we need to continue on the path that we are on. I think it's a significant reminder to the APS about, you know, their accountability to the community. I think it's a very black chapter in public administration. I think there's always a range of reasons about why it got to that point, and obviously executive government can't walk away from the responsibility they had and the role they played. But I think in terms of the integrity, and you know, sort of forward looking APS there's a lot of work to do in response.

BURTON: Right. Many of the issues within Robodebt were, if you like, system issues. One of them certainly was poor quality cabinet processes and advice, notably from the Finance Department, which, you know, for the record ticked through the Robodebt, three versions of it, does that worry you?

GALLAGHER: Well, I think again, I think there are when it's operating at that level, and I'll come back to Finance, you know, there is enormous responsibility on executive government for how cabinet processes actually work. You know, there are systems in place around you know, circulation, timeframes, exposure drafts, ability to comment, you know, and I'm talking in a general sense, not necessarily about, because I don't know, other than what the Royal Commission’s looked at, how that cabinet, how the former government's cabinet operated, but there are systems in place that if you follow good cabinet government processes provide, I guess, safeguards to poor decision making. In terms of Finance’s role, and you know, Finance has a huge role particularly in relation to ERC. You know, they rely on you know, they can't, Finance’s role is to brief the ERC on you know, their understanding of whatever the measure is that's coming, but they do rely on advice from agencies who lead, the sort of the proposing agency. So, for example, in not necessarily talking about Robodebt, but if the advice from the agency is that, you know, this doesn't require legislative change or is operating within the law. I don't, there isn't another unit in Finance that would then go and check all that out. They would, they would

BURTON: I think that was the problem.

GALLAGHER: They would operate…

BURTON: There wasn’t a second check in the system.

GALLAGHER: Well, I mean, Finance’s role is not, it's not there to really interrogate all of the information. There has to be a level of partnership with the sponsoring department. And then sort of try it based on those, you know, that advice from the sponsoring department, have a look at what that means from a Finance point of view, and then they brief on the budgetary impact of it. But you know, I think as we work through the Robodebt Royal Commission recommendations, all of that will be assessed and we'll work our way through it. And it may be that there are some further changes that need to be made.

BURTON: And within the public sector piece, you know, there's some pretty basic values of craft at a really fundamental level, you know, spreadsheets were just wrong and not picked up any way through the system. How do you lift the general competency and capability within the public service.

GALLAGHER: Well, I think it goes back to some of the points I've made. You resource it properly, you have a very clear understanding about the you know, sort of the frank and fearless advice, the independent role that public service should play in terms of advising Ministers, I think, you know, and I'm again not referring to Robodebt because that was a catastrophic failure of a whole range of systems which you know, the public service needs to be accountable for its share of the responsibility there, and it will be, but you have to resource and you have to give confidence to the APS, that they are your chief advisors, and I think some of that was challenged under the former government. I genuinely do, I'm not trying to be overtly political here, but when we came in, and I took on this role, I knew that the public service was under pressure, but it was much worse than I had thought and that was a combination of years and years of underinvestment and instruction about the way the public service should operate in my view.

BURTON: We might take questions I know we've got a Fin Review question. I'm just going to check if anyone else has got it. Chris, before we go.

AUDIENCE MEMBER: Minister in the interest of trying to add value and try to get to solutions just coming off the discussion. If I'm describing a situation, you know, we have public services hollowed out, there are issues with who's got valuable advice and how to do that. And I'm part of the PEXA group and none of you heard Mr. Shorten earlier saying that it was a brainchild of COAG, has been successful as a startup and now an ASX company and has world leading AI which would add value about planning, how we drive population growth for economic benefit. And so, I think there's just, I guess what I'm looking for is a solution so that the value that can be added is done in a way that all of these different issues that you know, how do we address climate change, population growth? How do we build better cities, communities all the way through? You know, what's the linkage to go back to government to try and get those collaborations done so that we get value in the public interest?

GALLAGHER: Yeah, so is your question sort of how you like not through procurement arrangements or just generally how you involve, you know, organisations external to the APS in the policy development process?

AUDIENCE MEMBER: It's really both and it's to say that you know, I've looked at this from all the different perspectives pro bono as a community advocate, as an MP, you know, tried to, you know, build communities that were hit by deindustrialisation, globalisation, for instance Broadmeadows but also with CSL they’re manufacturing, you know, 50 million doses of AstraZeneca. So, here’s the downside socially, but then the upside economically, and we have to bring them together. I think there's enormous goodwill to do it. But we just had this lightning rod issue. So, how do we move beyond that in a collaborative way? And I think that's still a sweet spot to be found, if I can suggest that. I think there's enormous goodwill to make it happen.

GALLAGHER: Yeah, and same from the APS. I think, just quickly, like this goes to some of the work that we're doing around the partnerships model. And, you know, I don't want to see as a result of some of the response on the PwC that the APS closes in on itself. That is not the aim. I think the aim is to make sure the APS understands its purpose, its role, its function. It's also very clear about when it needs to buy in external expertise and rely on that and there's, you know, people have asked me, is this the end of consulting, you know, are you going to ban consultants from the from government work, like, we can't, you know, the APS doesn't have the expertise or capacity to do all that. So, we have to find that balance. And we will also have to have in place I think, and maybe some of this will come out of the Senate inquiry and our response to that or other processes, safeguards which safeguard the consultancy sector too so, you know, I see it as a strengthening of systems but not one where we turn in on ourselves, you know, the challenges facing communities across Australia are enormous and we have to work with every level of government, we have to work with civil society, we have to work with the business community, tech people, you know, and all the things I haven't even imagined yet in order to deliver the services Australians deserve.

BURTON: Thank you. Last question.

RONALD MIZEN, AFR: Minister, thanks so much for appearing. Just a quick question, you talked about resourcing. You're currently going through the process of setting up Australian Government Consulting and I'm wondering how you think you're going to go in terms of offering APS6, EL1 and EL2 salary bands to people that you’re wanting to get in and who traditionally in the private sector would be paid much more for the similar work on those salary bands.

GALLAGHER: Yeah, thanks for the question. So, in terms of our in-house consultancy model?

MIZEN:  Yeah.

GALLAGHER: Well, I think my first point is people working in the APS do so for a range of reasons, not just pay, I think pay’s part of it, but we're never going to compete with some of those salaries and I don't think anyone's pretending that we will. But I actually see it from a workforce development point of view too, particularly as we’re needing to attract and retain you know, a new generation of public servant is what we're seeing, and it'll be no surprise to anyone who's got a Gen Z or below; they don't want the same job for life. They want to come in, they want to problem solve, they want to be deployed in a range of areas, they want to build up a whole set of skills that I guess the traditional public servant model, or it challenges that model. So, I see it as an exciting new opportunity to a public service career. You know, we're currently bargaining with our staff. So, I think, you know, good wages and good conditions are part of that.

BURTON: Finishing the Maternity Act?

GALLAGHER: That's another thing on my desk. So, it's part of that but we're not going to pretend that we are going to compete with those high salaries at every point, but it is about crafting a new profession in a sense within the APS. Do you want me to address the maternity leave?

BURTON: Yeah. Why don’t you?

GALLAGHER: Well, we current so there has been…

BURTON: Why is it so important?

GALLAGHER: Well, hugely important. And I think the fact that we have a Maternity Leave Act, probably, you know to everybody the language has moved on, sort of shows you how dated that legislation is and it is dated. So, we're dealing with it a couple of ways. We'll have a formal response to the review but we're also bargaining with our employees now and obviously, parental leave and how that’s structured is an important part of those negotiations. So, it's come up through the review, but it's also front and centre in some of those negotiations. As you know, and a lot of people, a lot of parents, because it's not just women will say they write flexibility and access to leave to allow them to manage all of their different roles ahead of significant pay rises. So, I would say that though.

BURTON: And fair enough to say you're leaning into it in terms of the negotiations?

GALLAGHER: Yeah, so across the service it's patchy like everywhere else, so there's, it's patchy in remuneration. We have some very low paid agencies and some and obviously, others that are at the top of the range. It's the same in conditions, because we've got this devolved bargaining system and we haven't really had bargaining you know, for years and years, but as it fragmented people and that and that stops portability across the service because if you're in a highly remunerated, flexible work environment, why would you go and work somewhere where the pay’s you know, 10 grand less a year and you don't have the same conditions? So, part of what we're trying to do is bring together a sort of a core set of conditions. We want to look at parental leave across the board, and we, you know, at the moment, it's quite significant variance between particularly the birth parent, and I think the average leave entitlement for the second parent, primarily the father is only three weeks or so. So, looking at how we you know, that's it's not a modern way, the private sector is way ahead of us. So, we have to look at ways to attract and retain people on those conditions as well.

BURTON: All right. Thank you. We're out of time, unfortunately, I’d like to say thank you very much for being here.

GALLAGHER: Thank you.