The use of alternative means for funding and procuring government services is one of the most significant issues in contemporary public sector administration. In effect, we are witnessing a degree of convergence between the public and private sectors as a means of improving the delivery of required services to the Australian public.
Significantly, in a democratic system of government, the privatisation of the public sector does not obviate the need for proper accountability for the stewardship of public resources. Furthermore, transparency and accountability can contribute to improved performance in terms of value for money: they can also represent good business practice.
Ultimately, government and parliament decide on trade-offs between public sector accountability and private sector cost efficiency. Integrated, coherent and effective corporate governance frameworks offer the prospect of public accountability and protection of the public interest. The public sector does have something to learn from the private sector in this respect while recognising the complexity of public interest factor and its associated wide-ranging requirement for accountability. On the other hand, if privatisation of public services is to work effectively, private sector providers have to recognise the rights of citizens not just as customers or clients, and the associated accountability that goes with that recognition.
Nevertheless, the convergence raises issues about whether there should be a change in the nature of accountability. Private sector providers clearly feel under pressure from the openness and transparency required by public sector accountability to Parliament and the community. Public sector purchasers are under pressure to recognise the commercial 'realities' of operating in the marketplace. As Professor Richard Mulgan of the Australian National University has observed:
... as long as management in the public sector continues to be assessed by private sector standards, and as long as the private sector continues to be increasingly entrusted with public purposes, both political and social as well as economic, we can expect further pressure on the distinction between the two sectors in matters of accountability.188
There is a need for at least some movement towards striking a balance on the appropriate nature and level of accountability and the need to achieve cost-effective outcomes by: emphasising project and contract management skills in public sector managers; basing commercial relationships on sound tendering and administrative processes and an enforceable contract; and ensuring that public accountability is not eroded, by default, through contracting-out that reduces external scrutiny by Parliament and/or Auditors-General.
Auditors-General need full access to information as well as to government assets, including on private sector premises as necessary. We need to be able to assure Parliaments and Executive Governments about legal compliance, probity, security, privacy and ethical behaviour as well as providing an opinion on financial reporting and the systems and controls on which such reporting is based. We also need to be able to put in place a sound basis on which to assess the performance of private sector providers as well as of the 'purchasing' agencies.
In most respects auditors should not need any more information and/or evidence than the accountable public servants would require in order to discharge their management obligations. Such accountability cannot be outsourced to the private sector. Nor can auditors fail to contribute to the development of a suitable accountability framework for the changing environment of the public sector with its greater focus on the market and the involvement of the private sector in recent years. At the same time we need to recognise an important reality, that:
The private sector has no real equivalent to political accountability, for which precise measures are never likely to be found.189
Does this necessarily block the consideration of a different kind of public accountability? While essentially an issue for governments and Parliaments to resolve, the public sector and Auditors-General must meanwhile account to stakeholders and seek the cooperation of private sector providers in doing so. Hopefully, this will more resemble a partnership in which parties understand and act both on public interest and commercial imperatives that need to be met by public sector purchasers and private sector providers respectively. The notion of partnership should also extend to agency and entity cooperation and coordination, particularly when setting strategic directions and sharing better practice. This is evident in what appears to be a move towards greater networking rather than simply growing market-based bureaucracies. Nevertheless, the two approaches may be mutually reinforcing rather than mutually exclusive.
Sound corporate governance provides the mechanism to bring all of this together - not simply to manage the risks but to transcend them. Corporate governance becomes more pressing in a contestable environment because of the separation of core business operations and the outsourced service delivery elements. This is because a sound corporate governance framework assists business planning, the management of risk, monitoring of performance and the exercise of accountability. While we can, and should, learn from private sector experience in such areas, public sector managers would do well to be mindful of the need for transparency and the interests of a broader range of stakeholders particularly when assessing and treating risk.
The public sector may not always be responsible for delivering public services but inevitably it will be held accountable for results achieved. In a more contestable and performance oriented environment, increasingly involving the private sector, a major issue for those managers is just what being accountable actually means in practice. There will most likely be continuing guidance from the Parliament and/or the Government in this respect. In Australia's case, a key Senate Committee has served notice that it will:
…continue to question, in estimates and in annual report or other agency operating processes, such matters as the delivery of services when contractors go to the wall, legal costs, the immediate and longer-term costs and benefits of the use of contractors, the probity of tender processes, et cetera.190
At the very least, audit institutions will need to be in a position to respond in a timely and effective manner to such questions as part of our accountability to Parliament. As with other public sector organisations, we will need to focus more attention on our performance management as part of a sound corporate governance framework.
So, we come to the question - are there gaps in public sector accountability in the context of PPPs? The overall accountability framework does exist to deal sensitively with private sector concerns, while maintaining accountability for the public funds used. In many cases, the extent to which that framework is effective will depend upon the approach taken by governments to the question of balancing confidentiality questions with the public and parliament's right to know, as well as the approach parliaments and Auditors-General choose to take in exercising their information access and reporting powers. Depending upon the approach to accountability taken by governments, agencies and private sector entities, this may involve exercising those powers in a manner, and with a frequency, not previously seen. There is a need for a disciplined approach to accountability by all players. As a former New South Wales Auditor-General noted:
The science of accountability involving, as it now can, performance indicators, service obligations and quality measures allows the government to commercialise its activities in an accountable manner. All that is needed is the will.191
The on-going question for Parliaments is whether this is sufficient for their notion of accountability and the confidence and assurance that goes with it.