Appendix A — Selected case studies

These case studies are designed to explore issues in public sector innovation across the spectrum of public sector activities, including policy development, program delivery, regulatory approaches, use of technology, organisational innovation and provision of new or enhanced services. The materials for the case studies were provided to the ANAO by the relevant agencies.

Summaries of the 10 case studies are provided in the following sections. The full case studies are available through the ANAO web site: www.anao.gov.au

A.1 AUSTRALIAN CUSTOMS AND BORDER PROTECTION SERVICE — DETECTOR DOG PROGRAM

The development and application of a scientifically based method of selective breeding for needed traits in detector dogs has enabled the Australian Customs and Border Protection Service (Customs and Border Protection) to overcome the severe limitations of the opportunistic method of obtaining detector dogs which had previously been used. The success of the program has not only enabled Customs and Border Protection to make more extensive use of detector dogs in its operations, with associated benefits in terms of drug seizures in particular, but also delivered further national benefits from the provision of dogs to other Australian agencies and the capacity to supply both animals and expertise to counterpart agencies in a number of other countries.

Customs and Border Protection began using detector dogs in 1969 and, in light of the support for use of detector dogs from the Australian Royal Commission of Inquiry into Drugs, Customs and Border Protection moved to establish a Detector Dog Training Centre in 1979, with dogs being recruited from a combination of commercial breeders, animal shelters and public donation. However, this approach did not provide a sound basis for supplying dogs suitable for training — the success rate being 1 in a 1000 from the general population.

In seeking to address this issue, the management of the Centre established that no breeding and development model existed anywhere in the world that would meet the key requirements of a guaranteed supply of dogs suited to detection work for known cost. The Centre therefore established a collaborative research partnership with the Royal Guide Dogs Association and the University of Melbourne under which a doctoral investigation of genetic and environmental influences upon key detector dog traits was undertaken. A pilot breeding and development program for 54 dogs was undertaken by Customs and Border Protection as part of this research.

Based on the outcome of the research program, notably the selection rates of 24 per cent for dogs involved in the pilot program, Customs and Border Protection built the National Breeding and Development Centre (NBDC) for production of 40 dogs per year. The NBDC has built on its initial success, with over 1800 dogs having now been bred and retention rates for breeding/detector placement have increased to around 75 per cent.

The NBDC was also able to refine its developmental training to produce multi-response dogs for searching both cargo and people, which has led to greater levels of productivity and flexibility in deployment as the one detector dog can operate across the full array of border environments. The program has also been expanded from narcotics detection to encompass chemical precursors/explosives and firearms.

The capability provided by the NBDC is not only utilised by Customs and Border Protection. It played an important role in providing dogs for explosives detection at the Sydney Olympics and now provides dogs to the Australian Army, Royal Australian Air Force, Australian Federal Police, Australian Quarantine and Inspection Service, and State and Territory Police and correctional services.

The innovative approach of the NBDC has also delivered foreign relations benefits to Australia. A recognised world class breeding and training program initially led to close cooperative links with a number of US Government agencies and the provision of both animals and genetic material. Similar cooperative links have since been developed with a range of other countries and detector dogs and puppies have now been supplied to China, Indonesia, Malaysia, Thailand, Japan and the Geneva International Centre for Humanitarian Demining. The NBDC continues to mentor the partner breeding colonies established abroad.

A.2 AUSTRALIAN TAXATION OFFICE — E-TAX INITIATIVE

The Australian Taxation Office’s (ATO) development of its e-tax web based service platform and its subsequent integration with other electronic databases making the best use of data provisioning capabilities, has delivered substantial improvements in the service provided to clients (taxpayers and tax agents) and also lowered transaction and compliance costs for clients and the ATO.

The current e-tax arrangements represent a further major step in the broad ATO modernisation program initiated in 1987 which was aimed at more effectively exploiting emerging information technology capabilities. This multi-phased modernisation program began with development of an Electronic Lodgement Service (trialled at pilot scale in 1987), moved on to the development of an electronic tax pack ‘e-tax’ (trialled at pilot scale in 1998) and was then extended further to the development of systems in conjunction with other government and private sector organisations providing tax relevant information to enable pre-filling of e-tax returns. The pre-filling of e-tax returns was piloted with data from Medicare and Centrelink in 2004–05.

Uptake of e-tax has expanded rapidly and e-tax lodgements exceeded paper tax return lodgements for the first time in 2005–06. Around 2.3 million people lodged their 2008 returns via e-tax and, of these, approximately 1.6 million chose to use the pre-filling functionality. A further 6.6 million pre-filling reports were downloaded by tax agents.

Apart from the obvious benefits of pre-filling (for example easier access to information and identification of forgotten accounts), use of the service also helps to ensure the accuracy of information submitted as part of the return and results in far fewer post-assessment adjustments.

The development of the e-tax arrangements required a concerted organisational commitment led by successive Commissioners of Taxation over two decades and an associated commitment to major investments in new technology platforms and business re-engineering. While the ATO benefited from more general developments in information technologies, e-commerce and community broadband network penetration, harnessing of these opportunities to its particular business requirements still required the ATO to make a major strategic investment.

The e-tax initiative has also required the ATO to focus externally and invest considerable effort to develop relationships with organisations responsible for providing tax relevant information in order to get data provided in a timely manner for pre-filling of returns and more fully realise the functionality of the e-tax capability. The relevant organisations include government agencies, financial institutions and employers generally (for payment summaries). In 2008, the pre-filling system shifted from the ‘expanding pilot’ phase to full production, encompassing all electronically available financial institution data, payment summary data and a wide range of data held by the ATO.

A.3 AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE

The enactment of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006(AML/CTF), which was designed to update Australian arrangements to meet international standards established by the Financial Action Task Force, presented the Australian Transaction Reports and Analysis Centre (AUSTRAC) with a major challenge. It not only required AUSTRAC to assume a broader regulatory role in addition to its established financial intelligence unit activities but also imposed a legislative shift from dealing with specified entities to designated services encompassing an unknown number of providers across a broader range of activities.

AUSTRAC was required to oversee compliance by a wide range of financial services providers, bullion sellers, designated remittance service providers, the gambling industry and other specified reporting entities, and ‘cash dealers’ (as defined under the Financial Transactions Reports Act).

AUSTRAC therefore proceeded to put in place an implementation strategy to deal with the extremely diverse range of organisations and increased numbers of transactions covered by the new legislation. Mechanisms were developed to identify, engage, and assess the entities covered and implement appropriate risk treatment regimes, including providing assistance to small business to understand their obligations and how to meet them. At the same time, development of more sophisticated data mining and analysis techniques to deal with the range and scale of transactions being monitored was also initiated.

A combined top-down and bottom-up approach within AUSTRAC produced a phased implementation strategy based on 34 identified projects covering customer facing issues, supervisory issues, workload issues and organisational growth and capacity building.

As the first step in engaging its customer base, AUSTRAC researched, identified, and contacted 19 700 prospective reporting entities regarding their potential AML/CTF obligations. A range of support mechanisms including follow up contact, a substantial help desk operation (which handled 38 164 calls in 2007–08) and substantially expanded on-line services were then put in place.

In 2007, AUSTRAC launched its Internet-based portal AUSTRAC Online — a system to allow businesses to enrol as reporting entities, receive assistance with their regulatory and reporting obligations, and submit an annual AML/CTF compliance report. More than 13 000 Australian reporting entities are now enrolled with AUSTRAC through the system.

The development of close working relationships with industry and public interest groups has been a fundamental element of AUSTRAC’s activities and the AUSTRAC Industry Consultative Forum (ICF) was established in 2007 to help meet the consultative requirements of the AML/CTF Act. The ICF, which meets twice a year and on an ad hoc basis as required, has two constituent forums — the Financial Consultative Forum and the Gambling Consultative Forum.

A.4 CENTRELINK — CONCEPT OFFICE

Since the establishment of Centrelink’s Tuggeranong ACT Customer Service Centre as a ‘concept office’ in 2006, it has played a key role in carrying forward Centrelink’s corporate strategy of refocussing its business processes on a more customer driven approach rather than the traditional service delivery paradigm.

The ‘concept office’ provides a standing capability to trial and fully evaluate potential service delivery improvements under actual workplace conditions prior to wider roll-out across the Customer Service Centre network.

Examples of innovations aimed at improving the customer experience that have been developed and which are now applied within the Centrelink Customer Service Centre network include:

• establishing a more welcoming environment via removal of counter barriers, with office layout being based on an open architecture;
• having customers met at the door by a ‘Customer Liaison Officer’ who can make initial inquiries concerning their business and either direct them to self-help facilities or, using an ultra mobile computer, log them into the queue for the relevant service;
• separating the office into red and green zones, with the red or ‘active’ zone providing self-help facilities for ‘mutual obligation’ customers seeking employment and the green or ‘supportive’ zone for people looking for other services; and
• providing access to relevant websites, photocopying and printing services for customers.

An important element in the ‘concept office’ approach is a preparedness to look beyond the linear service delivery approach previously applied. As part of this philosophy, a retail design consultancy was engaged by Centrelink to contribute ideas developed in the retail sector.

Similarly, the role that the Centrelink Customer Service Centres can play in meeting the overall needs of its client base is being reconsidered. Shared services arrangements with Housing ACT (officers available on site two days a week) and Medicare Australia (officers on site for four hours one day a week) have been instituted and a referral service for the Australian Taxation Office are being trialled. A truncated program was run in 2008 but a short lead-time and technical issues hampered the trial and it will be run again in 2009.

The ‘concept office’ innovations have been associated with tangible benefits. The overall result of innovations trialled during the first 12 months operation of the ‘concept office’ were improved customer satisfaction, reduced incidence of aggressive client behaviour and lower levels of staff absenteeism.

A.5 CENTRELINK — PLACE BASED SERVICES INITIATIVE

The Centrelink Place Based Services Initiative was introduced in July 2008. It was introduced in response to the Government’s commitment, outlined in its Social Inclusion Statement, to promoting social inclusion through a new approach to developing and implementing policy and programs requiring strong partnerships between all levels of government, business and community organisations.

The premise underlying the ‘place based’ approach is local level problem definition and response to address a set of circumstances endemic to a place or location for people most vulnerable to the impacts of social exclusion.

Accordingly, area level managers were invited to nominate projects to be operated as a series of discrete, self-managing local initiatives and six projects received funding for 2008–09:

• The Peachey Belt Community Service (northern Adelaide), to work with predominantly youth, single parents and Indigenous customers to increase their social and economic participation by providing place based integrated management;
• Morwell (Victoria), engaging with men aged 35–55 who have been unemployed for at least two years, to assist them by increasing the range of service options available and by addressing the personal issues that make it hard for them to secure and maintain a job;
• Shared Assessments in Logan (south-east Queensland), working with people experiencing domestic and family violence, young people leaving state care and/or people with unmet mental health needs services using a ‘person-centred planning process’ to increase their personal capacity and to connect them to appropriate services;
• Urban Indigenous Itinerants (NT), aimed at improving the connection of disengaged Indigenous urban homeless people with family, community, agencies and, where possible, assisting with accommodation options;
• Young Refugees (Broadmeadows and Fairfield), working with young refugee job seekers aged 16–24 who will work with a personal services coordinator to identify strengths and weaknesses and to develop goals that young refugees want to achieve via the initiative; and
• Cooma Young Carers (southern NSW), aimed at developing, in collaboration with local service delivery partners in the Cooma region, a referral program for young carers aged 16–25 to assist them to access support needed to remain connected to education, training and employment opportunities and to increase community awareness of their issues in the Cooma region.

The six initiatives are intended to test various practices of intervention that aim to improve customer outcomes through the development of collaborative models of service delivery within a community. They share a common strategy of placing the customer at the centre of the service delivery system and involve the collaborative design, delivery and review of a place based service response to address specific social inclusion challenges created by the place. The initiatives are informed by a participatory action research framework and underpinned by an outcomes-focussed program logic approach, with regular review points to monitor and measure outcomes and recalibrate approaches.

Overall, the place based approach is premised on a reformulation of the Centrelink service delivery model to focus on customer-centric service responses. A key element in delivering this is to define and pursue an appropriate role for Centrelink within an integrated, sustainable service delivery system that meets the customer’s holistic needs. Development of strategic partnerships between all levels of government and locally based business and community stakeholders is therefore integral to the place based approach.

A.6 COMMONWEALTH SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION — NATIONAL RESEARCH FLAGSHIPS INITIATIVE

The Commonwealth Scientific and Industrial Research Organisation’s (CSIRO’s) National Research Flagships Initiative encompasses 10 large scale multi-disciplinary research partnerships with other research institutions, industry and government agencies to address a range of major human, environmental and economic challenges and opportunities facing Australia. The Flagships have now become a central feature of CSIRO’s corporate and research strategy. Estimated funding for Flagships in 2009–10 amounts to $419 million, with CSIRO appropriation funding accounting for $217 million and industry and other independent sources contributing a further $202 million.

The Flagships Initiative commenced its development phase in 2002 through an extensive process of reviewing CSIRO’s research strengths and developing potential research programs and partnerships that might be undertaken to address some of the nation’s most important challenges and opportunities. The resultant National Flagships Program was formally launched by the then Prime Minister in April 2003. The initial six Flagship projects were Water for a Healthy Country, Wealth from Oceans, Light Metals, Energy Transformed, Food Futures and Preventative Health.

In 2006, a government-mandated review, chaired by the then Chief Scientist, Dr Robin Batterham, was highly supportive of the National Flagships initiative. The review found ‘the Flagships offer the most promising mechanism yet to drive large-scale activity addressing Australia’s National Research Priorities in a collaborative, cooperative and intensively managed manner’. Consequently, in 2007–08, a further three Flagships were established — Climate Adaptation, Future Manufacturing and Minerals Exploration. The tenth Flagship, Sustainable Agriculture, was established in 2009.

The Flagships Initiative’s clearly articulated focus on national impacts, outcomes and partnerships with other organisations enabled CSIRO to put a radically different investment proposition to government. As a result, substantial additional government support has been provided to resource the Flagships program. Additional funding of $20 million was provided in the 2003–04 budget, followed by $305 million in the 2004–05 budget to enable full-scale implementation of the initial six Flagships and $174 million in 2007–08 to fund the further three Flagships.

The key feature of the Flagships is a networked approach which brings together multi-disciplinary research teams from across CSIRO and other research institutions under a partnership arrangement which also engages industry and/or government stakeholders in the research programs. This engagement is reinforced by the operation of Flagship Advisory Committees for each Flagship. Comprising relevant stakeholders, these Committees ensure that the program of research and development for each Flagship is responsive to the strategic research needs of industry and society.

The Flagships initiative has been supported by a profound organisational and cultural transformation within CSIRO from structures and processes centred on the pre-existing divisions, which operated in a largely autonomous manner, to a coordinated matrix leadership and management structure capable of supporting the thematic research programs and cross-organisational management structures of the Flagships. The extent to which this significant cultural change has been accepted internally was demonstrated by CSIRO’s most recent Staff Insight Poll, with the testing of Flagship importance and acceptance producing outcomes ranking in the top three positive responses across the survey.

The thematic approach adopted in developing the Flagships research programs has also now been applied across CSIRO, with its overall research portfolio being organised on the basis of research themes and reviewed annually via the Science Investment Process. The Science Investment Process is a two stage process involving the setting of broad research directions for the organisation, followed by the allocation of specific levels of investment to research themes.

Transformation of the way CSIRO does business, from largely autonomous Division-based research programs to an outcomes-focussed organisation-wide research strategy with the Flagships at its centre, continues to go together with a major organisational change strategy under a ‘One CSIRO’ banner. The transformation of the way CSIRO does business is integral to the successful implementation of the Flagships and associated organisational changes.

A.7 COUNCIL OF AUSTRALIAN GOVERNMENTS — COLLABORATIVE ARRANGEMENTS ACROSS JURISDICTIONS

Since the 1920s, the goals of intergovernmental arrangements in Australia have been directed towards coordination, preventing overlap in the provision of services, uniformity in the administration of common functional areas, and the consideration of national priorities.

The use of Commonwealth–State ministerial councils commenced in 1923 when the Loan Council was established as an informal forum. Following the Second World War, ministerial councils became an important element of intergovernmental arrangements as governments were willing to engage in mutual exchange and, by the early 1990s, there were over 40 ministerial councils. A number of these ministerial councils focussed on arrangements which were the subject of Commonwealth Specific Purpose Payments to the States. By 2007, the number of these Specific Purpose Payments had reached 92.

In 1992, the Council of Australian Governments (COAG) was established to improve efficiencies in the delivery of services between Commonwealth and State governments. Over time, COAG reforms have focussed on a wide range of matters, including roles and responsibilities, micro-economic reform, natural resource management and service delivery and in 2008, steps to modernise Commonwealth–State financial relations including:

• rationalising the 92 Commonwealth Specific Purpose Payments into five broad Specific Purpose Payments, subject to agreements outlining the objectives which clarify the roles and responsibilities of the Commonwealth and the States in each area and supported by performance indicators;
• a move away from the use of input controls for Specific Purpose Payments and a greater focussing on the achievement of outcomes and outputs in the delivery of services by the States and Territories without prescribing how this is to be achieved in areas such as health, schools, vocational education and training, affordable housing and disabilities; and
• the introduction of a new approach to assistance governed by National Partnership Agreements under which funding is provided for specific projects that facilitate reform. Some agreements involve incentive payments to reward performance.

The new model for Commonwealth–State financial relations in Australia is based on the principle that the States have the on-the-ground experience in how best to deliver services in their jurisdictions. With this in mind, the Commonwealth has put in place a framework aimed at providing the States with the flexibility to innovate and tailor solutions in a way that best fits the needs of their populations.

This model is a significant step in the journey and evolution of Australia’s approach to managing Commonwealth–State financial relations. Many of the challenges facing Australia are issues that need to be addressed through the Commonwealth working in partnership with the States and the design of this new framework includes a reporting framework that will focus on the achievement of results, value for money and timely provision of publicly available and comparable performance information.

A.8 DEPARTMENT OF INNOVATION, INDUSTRY, SCIENCE AND RESEARCH — VANGUARD E-AUTHENTICATION SERVICE

The ‘VANguard’ electronic authentication service, developed and administered by the Department of Innovation, Industry, Science and Research, enables business-to-government online transactions to be conducted securely.

VANguard provides the following services:

• The VANguard User Authentication Service provides agencies and business with assurance of the authenticity of each party. Agencies redirect their business users to VANguard for authentication before they can access secure agency web sites or applications.
• The VANguard Signature Verification Service enables agencies to have PDF forms or XML-based content signed by business users and verified by VANguard.
• VANguard’s Timestamping Service provides independent, verifiable electronic evidence of the date and time of an electronic transaction.
• VANguard’s Security Token Service enables agency systems and business systems to conduct secure online transactions. Agencies and businesses obtain security tokens from VANguard to enable authentication.

VANguard represents an important step forward in progressing the Government’s online service delivery agenda by providing effective authentication mechanisms to enable secure business-to-government online transactions. Importantly, the development of VANguard as a dedicated service that can facilitate e-authentication on a whole-of-government basis offers reduced cost and complexity for business by avoiding the need to meet different authentication requirements imposed by individual agencies.

Avoiding costly duplication of authentication solutions across government agencies offers major benefits from a government perspective. The VANguard service serves to insulate agencies from the technology used to authenticate business users and eliminates the requirement for agencies to manage Public Key Infrastructure credentials.

Two major government business initiatives rely on VANguard providing key infrastructure elements and underpinning authentication services. These are the Standard Business Reporting program (a multi-agency program involving the Treasury, the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the Australian Taxation Office and state revenue offices, and the Australian Bureau of Statistics) and the Australian Business Number/Business Name project, specifically the Business Online Services project element.

More generally, VANguard has entered into working arrangements with Centrelink, the Department of Defence, the Australian Fisheries Management Authority, the Australian Government Online Services Project, the Victorian Office of Small Business and the South Australian Department for Transport, Energy and Infrastructure.

As VANguard usage is not mandated, successful expansion in the uptake of VANguard services has depended on effective dissemination of project information to other agencies and strategic involvement in government e-business initiatives such as Standard Business Reporting.

A.9 THE TREASURY — STANDARD BUSINESS REPORTING

The Standard Business Reporting (SBR) program was initiated by the Australian Government in 2006 in response to the Report of the Taskforce on Reducing Regulatory Burdens on Business, ‘Rethinking Regulation’, which identified excessive reporting and recording burdens on business as one of five priority areas for reform by government. Given its cross-jurisdictional mandate, SBR was subsequently endorsed by the Council of Australian Governments and incorporated into its regulatory reform agenda.

SBR is expected to be available from July 2010, with the resultant envisaged reduction in the regulatory burden associated with financial reporting expected to generate savings to business of $800 million per year. This is expected to be achieved by:

• removing unnecessary and duplicated information from government forms;
• using business software to automatically pre-fill government forms;
• adopting a common reporting language, based on international standards and best practice;
• making financial reporting to government a by-product of natural business processes;
• providing an electronic interface that will enable business to report to government agencies directly from their accounting software, which will provide validation and confirm receipt of reports; and
• providing business with a single secure online sign-on to the agencies involved.

The SBR program is being led by the Australian Treasury, with other participating agencies being the Australian Prudential Regulation Authority, Australian Securities and Investments Commission, the Australian Taxation Office, the Australian Bureau of Statistics and all State and Territory Government revenue offices. The SBR program has around 50 forms in scope, including Business Activity Statements (the Australian Taxation Office), financial statements (Australian Securities and Investments Commission) and payroll tax (state/territory revenue offices).

Strong partnership arrangements are a critical element of the SBR program. A governing board that includes the heads of all participating agencies oversees implementation of SBR, which has been co-designed by the participating agencies in partnership with software developers, business and business intermediaries.

The SBR design stage is now complete and the build of SBR’s core services and single sign-on solution has commenced. Operational testing of SBR systems commenced in October 2009.

Apart from the direct benefit industry is expected to derive from easier business-to-government reporting, SBR is considered to offer other benefits to industry and government. As the XBRL financial reporting language being used for SBR is increasingly being adopted as the basis for sharing financial information in an electronic form by accounting and financial reporting industries globally, the establishment of SBR compatible systems is expected to promote streamlining of the movement and use of financial information in other business reporting chains. While the reduction in regulatory compliance costs for business was the key driver in the SBR program, it was also expected to improve the quality of data submitted to government and deliver processing improvements, reducing ongoing administrative costs for the agencies involved.

A.10 THE TREASURY — INTERGENERATIONAL REPORT

The preparation of an Intergenerational Report (IGR) every five years was mandated by the Charter of Budget Honesty Act 1998, with the first report being released in 2002 and the second in 2007. The IGR represents a major departure from previous analysis available to the Government and the wider community in that it provides an overall assessment of the sustainability of government policies over a forty year period.

Establishing the IGR as an ‘authoritative’ assessment required the development of methodologies extending beyond Treasury’s established expertise in budget management and macro and micro economic modelling. The IGR was therefore developed on a whole of government basis.

Substantial input was sought from other key departments and academia to ensure the best available data and analysis on key drivers of the Government’s fiscal position in areas such as population, labour force, payments to the unemployed, aged care, health care and education, was incorporated into the Reports.

In preparing the first IGR, Treasury was able to draw upon an established capacity in respect of retirement income modelling developed as a consequence of the establishment of an inter-agency taskforce to examine these issues in 1992. This expertise made possible effective analysis of the interaction of superannuation, demography, labour markets, social security and taxation over the 40 year period of the IGR, these issues being central to the overall outcomes.

Further innovation in the IGR methodology continues to be pursued, with more refined analysis such as the ‘population, participation and productivity’ framework for developing projections for real GDP and real GDP per person being introduced in the second Report.

By providing an authoritative perspective on major issues affecting Australia’s longer term future, the Reports have been highly influential reference points for considering long-term issues and trends and possible policy responses within Government. In releasing the second IGR, the then Treasurer stated that ‘In practically every portfolio area — health, education, family benefits, welfare, superannuation, pensions — the IGR now provides the overall architecture within which we operate.’

The Reports have also been significant in positioning and increasing the influence of the Treasury at the centre of government policy advising.

 

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