Tense Appointments: Public Sector Boards in Australia

There is very little known about appointment processes to Australian public sector boards. Empirical work to date suggests that there is a variety of practices. At one extreme was the use of most systematic processes, going through the generally accepted stages for good appointment processes: audit, advertisement, merit-based selection with eventual cabinet approval. The practice of appointing “mates” with little due process, was at the other end of the spectrum. It is a process highly focused around Ministers. While some good appointment practices are occurring, these practices are by no means common, and overall could not be described as comprehensive or systematic. Of concern is a serious lack of transparency and accountability and hence integrity in the process.

Research so far suggests a couple of major themes apart from the obvious lack of transparency. One is that of diversity and inconsistency in perceptions and practices. It will be interesting to see if there are any commonalities by type or function of organisation and the extent to which enabling legislation plays a role. A key emerging finding from research being conducted, which is consistent with earlier research, is a set of tensions which arise out of appointment processes. Tensions can emerge:

· among board members, particularly between ministerial appointments, on the one hand, and those seen to have a conflict of role, as government or industry “representatives”;

· between the chair and CEO, whether one or both are appointed by the Minister;

· between the CEO, board and the portfolio department in attempting to gain the ear of the Minister; and

· between the board and the Minister where selection processes around the CEO leave some ambiguity.

The Uhrig Review (2003) has attempted to deal with some of these issues but its approach does raise a basic question to ponder. Is it appropriate for the public sector to move toward the private sector concept of a board or is it more appropriate to accept some of the above tensions and put into place robust ways of managing them well?

Until recently (with the resignation of an appointment to the board of the Reserve Bank of Australia) there has not been much pressure on the government to make the current board appointment process more transparent and accountable. There has been no major crisis forcing reform. It can only be a matter of time before a political appointment to a high profile board in Australia backfires enough to dent public integrity in its key institutions.

Can we expect improved standards of governance around appointment processes in the Australian public sector in the near term? Failing a crisis, major reform appears out of the question at the moment. But is it realistic to expect, in the interests of well-performing organisations, more systematic practices which lead to greater transparency and a greater input of merit into the selection process?

This article is an extract from a paper delivered at a conference held by University of Canberra ARC Team on Corporate Governance at Old Parliament House on 8-10 March 2006. Download the full paper here.

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