Tom Burton: the waste and faux-accountability of reporting

If ever there was a candidate for red tape reduction it is the forest of annual reports, which literally get dumped in Canberra’s Parliament House each spring session.

Walk past the press gallery pigeon holes and you will see box after box of reports from agencies big and small, many unopened, a sharp reminder of the inability of government as a collective institution to adopt to the modern world.

While the corporate sector long ago gave up producing and distributing massive tomes, the federal government continues to insist its hundreds of departments, agencies and quangos produce printed annual reports. In what can only be described as a make-work program for Canberra’s printing and design industry, every agency is required to produce bound reports primarily for the members of Parliament House.

The printing of annual reports is the tail which wags a long process of content preparation, editing, design, layout and endless proofs. This is all done to a set of requirements laid out in micro detail by the Department of Prime Minister and Cabinet. PM&C details paper quality, binding and size, to support what is a modest print run of several hundred for distribution across Capital Hill, where protocol requires the reports be tabled for parliamentarian review.

The reports, in fact, are not tabled. They are delivered to a small office in the bowels of Parliament House. By my observation, unless there is a particular controversy, that is where they sit.

MPs — or more particularly, their offices — may seek a random report or two, but ask any attendant in Parliament and they will attest the reports are rarely asked for. A box or two get sent to the press gallery, and some to the library for archival purposes.

And while almost all are available online, 20 years after the first browsers began to popularise the world wide web, this arcane practice of producing print copies continues.

It is a costly indulgence. Producing for print requires a whole design and layout process, which is far more bespoke and refined than digital production. Layouts and proofs are created and sent back and forward, with the inevitable last-minute corrections costing time and money.

Then there is the actual printing and distribution costs. For your average annual report produced on a tight budget the actual production costs of indulging Parliament’s antiquity would be conservatively in the order of $40,000 minimum, when fully costed.

No one quite knows how many federal agencies there are, but let’s say around 700 are required to report. That adds up to a tidy $28 million. You could repave a lot of school playgrounds for that money.

You don’t have to be a genius to see it is wasteful. The professionals who put these reports together all say it is a stupid exercise, but year after year PM&C dutifully release its guidelines and regimentally every agency goes through the print pantomime yet again.

The production costs, of course, are relatively trivial when compared with the actual cost of collecting the data and associated words, images and graphics.
And this is where the real reforms are begging.

There are two areas where a completely different mindset is required.

First, almost all agencies have a website where they regularly disclose their various activities. Some do this better than others, but slowly and surely government agencies are learning how to engage on the modern world.

In many cases far more is reported and published than what goes into any annual report. And so the question is: do we really need the ritual of a highly curated yearly wrap of activities?

As with any organisation — public, private or community — the annual report is largely a self-congratulatory exercise wrapped around some mandatory financial and other reporting. Why bother when it is all sitting on the enterprise website?

Second is around how we actually report. In government the financial reporting essentially duplicates the budgetary documents together with an alphabet soup of KRAs, KPIs and performance jargon.

The way government reports its financial results is very literal, with an almost complete lack of key ratios and other indicators that would give an outsider any sense of real performance or efficiency. Whereas the corporate world has embraced triple-bottom-line and impact reporting, government accounting is stuck in the days of what the university commerce schools were teaching in the ’70s.

Reporting with no thought to outcomes

More profoundly, the reporting is very much output and input reporting — fifty complaints were managed by 20 people, etc.

Governments, both federal and state, have poor understanding of the activities which underpin its costs, so the citizen gets no sense of what to compare similar activities with — and if there is any underlying deterioration and improvement. It seems the whole activity accounting revolution — where the real costs associated with an activity are articulated — has simply passed government by.

And the very focus on outputs means there is little idea if the actual outcome is achieved. This point was made strongly by the Audit Commission review. The federal government gatekeeps an over $400 billion spend each year — a quarter of the national economy — and the reality is we have a very poor view of how effective it is.

More importantly, by not focusing on outcomes we miss a huge opportunity to rethink and innovate. The process of thinking in outcomes opens up a discussion about what the alternative solutions are and who might be best to deliver them.

To pick a current example: on child cyber safety, do we really need another bureaucracy to regulate and manage that incredibly fast-moving and globalised world — or could it be that with the same money we invest in an education program run by community groups and schools who have to deal with this issue every single day?

Meanwhile, as any one in government will attest, the reporting side has got completely ridiculous. Deloitte Access Economics recently reported on the high cost of internal compliance — claiming it costs business $160 billion a year. If that is the cost of business compliance intuitively it is going to be of similar order plus materially more for government. Lets say $70 billion, crudely.

And with it a deadening process of micro-reporting, from weekly to monthly to annual, from sectional to branch to divisional, from project to programs, from new projects to ongoing, and on and on it goes.

Like lemmings over a cliff officials around the country produce reports with little evidence, stocking filing cabinets and servers with mindless unintelligent data. There is also a huge private sector industry that lives off this mania for program evaluation and other types of reporting.

Apart from rare exceptions, this is a highly managed environment where (typically private) evaluators prepare measured and highly conservative reports — often well after the event to satisfy auditing and other requirements. Cynically, many of these evaluators knowingly pull their punches, cognisant that frank and fearless does not win you the next evaluation contract.

The fauxness of the reporting ritual is endemic and goes to the top of the system. The Senate Estimates process is meant to be a venue for rigorous review by the Parliament of the financials of the various portfolios. These days it is a tragic joke, where hundreds of thousands of dollars of public sector wages are tied up in what could best be described as a seaside circus.

There are, of course, rare exceptions. But senators simply don’t have the wherewithal, time or expertise to systematically review financial performance of government agencies. Just attend one Estimates hearing and watch the inanity of senators — typically not the sharpest tools in the MP shed — go through the pretence of trying to account for public monies.

Twice a year senior officials are forced to prepare and then wait like minions to be called before their relevant committee — only to turn up and find themselves being grilled on issues which have nothing to do with money — and most typically are just part of the partisan political exercise to ensnare an agency into a one-day headline.

So what we really have is an entire edifice of accountability and reporting built on an outdated and essentially fictional performance construct. The public absurdity of the annual reporting façade is but the tip of a much bigger problem.

It’s an issue that will take real leadership to tackle.

More at The Mandarin: Document dump: online annual reports good, open data better