James Riley
August 1, 2017

Mike Pratt: New man in Treasury

Podcast

Mike Pratt: New man in Treasury

Treasury Secretary: Mike Pratt is looking to drive public sector change in NSW

When Michael Pratt puts his feet under his new desk today – his first as Secretary of The Treasury in NSW – he brings to the role not just a full career in banking, but also five years as the NSW Government Customer Service Commissioner.

It’s a powerful mix of experience. His appointment underlines with great clarity the state’s ambitions for aggressive public sector transformation.

Mike Pratt’s appointment to one of the state’s most senior public service roles strengthens the state’s already potent senior digital leadership team, which really began under former Premier Barry O’Farrell and given the continued backing of Mike Baird and now Premier Gladys Berejikian.

The ServiceNSW and digital initiatives to which Mr Pratt was attached had been given energy and additional political weight by former Finance Minister Dominic Perrottet and former Innovation Minister Victor Dominello.

With Mr Perrottet and Mr Dominello now both promoted – to Treasurer and Finance Minister respectively – the state’s digital drive has the direct patronage of people who ‘get it’ and who are in in the most powerful positions in Cabinet.

Mr Pratt’s appointment to run the Treasury after five years driving improved customer satisfaction outcomes for citizens in government transactions adds further heft to the effort. He replaces another former banker Rob Whitfield to the role, who laid the foundations of an entirely new budgeting system designed to drive better outcomes.

In this podcast interview, I started by asking Mike Pratt talks broadly about some of the achievements of the ServiceNSW roll-out and of digital service delivery improvements – and he identifies the key learnings that he says he can bring to the Treasury role.

When he took the role of Customer Service Commissioner at the behest of Barry O’Farrell, he said there was no job description put in front of him.

“I said to Barry, ‘Paint me a picture of what success is meant to look like in your mind’. And he said two things that have been my mantra on this,” Mr Pratt said.

“The first thing was that I want to fundamentally change the experience of citizens in their dealings with government in a day-to-day transactional sense in the way we operate,” he said.

“And secondly, we are so inefficient … I want to get cost out of the process.

“So my whole brief has been around the experience that you and I have as citizens with government, and to get efficiencies into that process and cost out.”

And you would have to say things have gone pretty well so far. All governments in Australia are doing some interesting stuff in this space, but NSW is by far the stand-out in delivering whole of government digital services and they are the only government to be driving this transformation from the most senior political and public service ranks.

So what does a former customer service commissioner bring to the Treasury secretary’s role?

It’s too early to say where the specific priorities will be, he says. But you can bet that the ‘outcomes focused’ budgeting overhaul started under Mr Whitfield will be doubled down by Mr Pratt. In fact, it is a Dominic Perrottet imperative, so you can bet on it.

“Government traditionally, through the clusters and agencies, has budgeted down through the silos of government,” Mr Pratt said. “By taking an outcome-focused view, you change the lens on the budget.”

The accounting seems straight forward enough. You decide what budget you need to achieve Policy X. You work out what agencies need to be involved and what budget are required to deliver that policy – and then you apply rigorous metrics to the specific outputs.

And then you adjust the resources against the measured outputs. Seems simple enough, but there is a quite radical cultural shift needed in order to make that happen.

“One of the things that has surprised me about government is that once you lock money into an operational budget – or in government-speak that’s recurrent expenditure, or what I’m used to calling OpEx, operational expenditure – that amount is locked into budget, never to be revisited again,” Mr Pratt said.

“Now, my view is that each of us should be held accountable for our operational spend year-on-year.

“So part of that move to outcome-focused budgeting is also to say, ‘what about the recurrent spend you’ve got? Let’s have a look at that and is there an opportunity to use that more effectively’.”

“So there will be significant changes to the budget. My initial read is that I think the team has done a really good job in laying the foundation. My responsibility now is to take that to a whole new level again, working both with my team and with the Cabinet.”

The cultural issue here is not peculiar here to the public service, he says. It is a completely rational response to not want to give up any resources you’ve been given.

“What we need to do and where I need to lead is building a culture of trust where relationships are strong and where there is something in this for both the agencies and for the Treasury,” Mr Pratt said.

“Me going in and saying I want a 3 per cent efficiency dividend without proposing any win-win for the agency and the broader Treasury is fundamentally wrong in terms of culture and approach.”

It’s a massive internal communications challenge for the Treasury and for other champions of change across government. The thinking applies well beyond just the delivery of digital services. It applies to all government delivery, from hospital wait-times to educational outcomes.

But at least the new Treasury secretary can come to the issue with significant wins in the digital service space.

The ServiceNSW project has been in the market for four years. When the transformation project started, digital channels made up usage in the “low 20 per cents”. Digital channels now account for 50 per cent of the one million transactions per week conducted by the NSW government, a huge lift.

The state has introduced a rigid, three-tier measurement regime to understand satisfaction and progress. It is measured in real-time, there is a ‘quarterly pulse’ quantum, and there is an annual survey.

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