The chosen few: How Victoria is really governed

No.1 Treasury Place is a blockish building on the edge of Melbourne’s CBD and, in normal times, the nerve centre of public administration in Victoria. Today, in the middle of another long COVID winter, the second floor corner office of Jeremi Moule is one of the few places where the lights are on.

It’s a Monday afternoon and rows of blank computer screens and dark cubicles provide silent witness to where, before the pandemic, public servants worked. Now, the business of government is carried on in thousands of makeshift home offices in suburbs and regional towns.

Moule, the Secretary of the Department of Premier and Cabinet, Victoria’s top bureaucrat, motions to a couple of empty couches. Dressed in an open-necked shirt and face mask, he is like the captain of a ghost ship.

The nerve centre of government. Ministers conduct a press conference outside 1 Treasury Place.Credit: Penny Stephens

Experienced career bureaucrats question how this man – a 46-year-old communications and strategy specialist – was given command of the bridge. He hadn’t previously run a government department or agency or overseen a government budget process.

The former basketball coach earned the trust of Premier Daniel Andrews’ key staff members when he helped develop the government’s communications strategy during the Andrews government’s first term.

Now Moule is responsible for leading the entire Victorian Public Service and safeguarding the political neutrality of an institution essential to good government.

Moule’s appointment, confirmed in the space of five days last year after long-serving secretary Chris Eccles resigned for inadvertently misleading the Coate inquiry into hotel quarantine, is cited by critics – both academic and from within the public service – as emblematic of a bigger issue: the erosion of one of the key notions of the Westminster system, that the public service is independent of the government and gives frank and fearless policy advice. Instead, there has been a concentration of power in the hands of the Premier, the staffers in his private office and a select group of political operatives-turned-bureaucrats.

Chris Eccles (right), who fell on his sword during the Coate inquiry into hotel quarantine.Credit:

“It has gotten markedly more political and more blatantly so over the last eight to 10 years,” said a career Victorian public servant speaking anonymously because they are not authorised to comment.

“You have got people in key public service positions that are meant to be the protectors of Westminster who are strongly politically aligned to current ministers.”

Moule agrees his appointment was unorthodox. But in an interview with The Age, he denies there has been any erosion of independence. According to him, there remains a clear line between the apolitical, considered policy advice provided by his public servants and the political advice that staffers provide to assist ministers in making decisions.

“A minister or a premier, regardless of how many people provide them advice, is ultimately making a decision that is a blend of their political skills and the advice that is brought to them by the public service,” he said.

“That balance is always part of the Westminster system.”

A small army

Charges of politicising the public service are not new. Nor are they confined to Victoria. In Canberra, the Prime Minister appointed his chief of staff to head the public service. And since the Whitlam government there has been a uniquely Australian tradition of career public servants also spending some time working for a minister as part of their private staff.

The current situation in Victoria is something different. Over the past several months The Age has examined how power is wielded in this state. For anyone who values Westminster notions of how government decisions should be made, the findings are confronting.

In nearly every department and within key government agencies, political operatives who have dedicated much of their professional lives to advancing the interests of Labor politicians are employed in executive public service positions.

Lissie Ratcliff, Daniel Andrews’ chief of staff.Credit: Twitter

At the centre of this power structure is the Premier’s Private Office (PPO). Sitting outside the public service, unaccountable to parliament and not required to respond to freedom of information requests, this group of 87 people – who outnumber Labor’s MPs – is the most influential and least transparent organ of government in the state.

Everyone who works for the PPO, along with 287 staff of ministers and MPs, is employed by the Premier’s chief of staff, Lissie Ratcliff. This provides Andrews with a small army of nearly 400 people paid to further his political interests and those of his government.

There is little accountability for their actions. When the Coate inquiry examined the quarantine failures which seeded the devastating second wave epidemic, no witnesses were called from the PPO, even though text messages tendered as evidence showed its staffers communicating with Department of Premier and Cabinet officials about security arrangements hours before a decision was announced on one of the central mysteries of the inquiry: why private security guards were appointed to patrol hotels.

Dr Colleen Lewis, an honorary professor with the ANU Australian Studies Institute and an associate of the Centre for Public Integrity, says there is a push among government integrity experts to subject ministerial and political advisers to the same accountability as public servants.

“Why are they carved out and made to be special when it is the taxpayer who is paying their salary?” she asks.

Bureaucrats speaking off the record because they are not authorised to make public statements, as well as multiple government insiders, say the PPO has subsumed policy development work previously done by the public service. This means that government decisions are increasingly made without the checks and balances provided by independent, specialist advice.

The next cog out from the PPO in the bureaucratic machine, the Department of Premier and Cabinet, has nearly tripled in size since the Andrews government was first elected. This is Moule’s bailiwick and the central agency of what is supposed to be an independent public service.

In June 2014 it employed 393 people. In June 2020 its headcount was 1070. The result is a concentration of administrative power at the expense of specialist departments such as health, transport and education.

The Premier’s private office and the public service led by the Department of Premier and Cabinet should operate in tandem to advise on policy. In reality, it is increasingly difficult to discern the two. At the height of the pandemic, the Premier’s three most senior political operatives regularly attended meetings of departmental secretaries to decide what advice would be provided to the Crisis Committee of Cabinet.

“The public servants have a strategic policy advice role and the advisers are there to weigh political options,” says Terry Moran, former head of the Victorian and Australian public services. “If you put everyone in the one room the system doesn’t work reliably and get the best results.”

Stamping his mark

On Sunday, November 30, 2014, his first morning as Premier, Andrews sent a clear message to the Victorian Public Service when he called the state’s most senior bureaucrat, Andrew Tongue, into his Treasury Place office and told him he was not required to come to work on Monday.

It is not unusual for a newly elected premier to choose a new department of premier and cabinet secretary, but normally the state’s most senior bureaucrat would stay on to assist in the transition.

Tongue had only been in the job for 18 months when he was dismissed. He was replaced by Eccles, who had previously served as top bureaucrat for Liberal NSW premier Barry O’Farrell and Labor’s Mike Rann in South Australia. The ruthlessness with which Tongue was treated shocked senior public servants. He is now back working in Canberra.

While the path between minister’s offices, the PPO and the public service is well-worn in Victoria, as it is federally and in other states, current and former senior Victorian public servants who raised their concerns with The Age in confidence say that since 2018 and Andrews’ thumping re-election, there has been a marked shift in the number of political operatives installed in senior bureaucratic jobs.

An example cited by multiple sources is the replacement two weeks after the 2018 election of Simon Hollingsworth, an experienced and well-regarded career public servant who has worked for Labor and Coalition governments in Victoria and Canberra, with ALP political operative Jamie Driscoll.

Hollingsworth was told he was being shifted out of Treasury and Finance into the education department about two weeks after the state election. No concerns were raised about his performance.

“The discussions I have had, prior to this role, with the Premier’s office have always been around a contest of ideas.”

Jeremi Moule, Victoria’s top public servant

Driscoll is an economist who previously worked for Deloitte and, according to those who work with him, is qualified, intelligent and capable. He has also spent much of his working life promoting the political interests of Labor leaders: John Brumby in Victoria and ACT Chief Minister Andrew Barr.

In his new job as Deputy Secretary of the Budget and Finance Division of the Treasury Department, Driscoll became the most senior bureaucrat with direct line responsibility for how taxpayer money is spent.

The 2018 election saw an exodus of senior public servants. Long-serving departmental secretary Richard Bolt left government, Department of Justice secretary Greg Wilson retired from his executive role and Department of Education and Training boss Gill Callister was told she wouldn’t be keeping hers. Education Minister James Merlino held a gathering after the election where he effusively praised the job Callister had done. Colleagues who attended were stunned when she announced, just a few weeks later, that she was leaving.

Richard Bolt, who left the public service after the 2018 election.

Apart from Driscoll, two other experienced political operatives currently occupy senior roles within the Department of Treasury and Finance. In the Department of Jobs, Precincts and Regions, three current deputy secretaries all worked as senior advisers or chiefs of staff to federal or state Labor MPs.

The Department of Premier and Cabinet’s executive director Sam Trobe helped run Bill Shorten’s 2019 election campaign and Tim Picton, a Labor staffer for 10 years, was given an executive-level job within the Major Transport Infrastructure Authority before he rejoined the political fray as West Australian ALP state secretary.

Cameron Harrison, one of Andrews’ senior policy advisers, was in May appointed head of investment and strategy for Breakthrough Victoria, a government-owned company registered two months earlier to manage a $2 billion research and innovation fund announced in last year’s budget.

These are not career public servants seconded for a period into a minister’s office but career political operatives and Labor loyalists inserted into the public service in decision-making jobs.

The Age has identified more than 30 senior public servants who served as advisers in the Andrews government. As one experienced departmental secretary noted: “When you see that transition happening backwards and forwards at really senior levels it is clearly politically motivated; it can’t be anything else.”

Moule himself, now the state’s most senior public servant, has been accused of being a political appointment. While acknowledging his unusual pathway to this position via “the comms stream ... rather than the purist policy or legal streams”, he says he is no “yes man”.

“I’d suggest the reason I am here is quite the opposite. The discussions I have had, prior to this role, with the Premier’s office have always been around a contest of ideas. It is being able to have those conversations with a political office, in a constructive way, that advances the views of the public service.”

Of the other former political operatives appointed to senior jobs within the public service, Moule describes each example cited by The Age as a highly talented person appointed on merit.

In response to questions from The Age and Sydney Morning Herald, a Department of Premier and Cabinet spokesperson said: “All DPC employees are bound by the code of conduct for Victorian Public Sector Employees, including the requirement to be impartial, and make decisions and provide advice free of prejudice or favouritism, and based on sound judgement.”

Trust and understanding

Don Russell, a former adviser to Paul Keating, writes in his book Leadership of the Australian tradition of public servants being seconded to the private staff of government ministers. This tradition is particularly evident in Canberra, where the head of the Australian Public Service, Phil Gaetjens, is a former chief of staff to Prime Minister Scott Morrison. At the time of Russell’s book, nine of 14 departmental secretaries had worked in a minister’s office.

“It is clearly helpful for public servants to have spent time in a minister’s office if they are expecting or end up as the head of a department,” Russell told The Age. “It provides people with a first-hand experience of how ministers think and operate. That is invaluable.”

Mike Keating, a former head of the Australian Public Service, agrees. “Rotation of public servants through minister’s offices as advisers, or in other roles, helps to build good understanding and trust between the APS and ministerial offices,” he said in a speech to the National Integrity Forum earlier this year.

The problem arises when public servants start thinking like political operatives.

“If you are looking for red flags, it’s a diminished capacity for the public service to perform its traditional and appropriate role, which is providing considered, full range of options and advice,” Russell said. “If you are seeing advice which is skewed to a particular outcome or that the public service is waiting around for direction on how to write the advice, that is not a good development.”

“We’re pretty much salespeople for [the Premier’s office].”

Andrews government MP speaking anonymously

In a state like Victoria, where the Labor Party has been in government for all but four years this century and the Andrews government has a strong social policy agenda on issues such as violence against women, voluntary assisted dying and gender identity, it is unsurprising that people with progressive politics are attracted to a career in the state’s public service. It also follows that any public servant who has worked as a political adviser in Victoria is more likely to have served a Labor MP than a Liberal one.

There are a handful of prominent former Liberal Party operatives who hold senior positions in the state’s public service. Anna Cronin, a chief of staff to two Liberal premiers, was appointed Commissioner for Better Regulation in the first year of the Andrews government. Former Liberal Premier Ted Baillieu’s chief of staff Michael Kapel was recently appointed chief executive of mRNA Victoria, a newly formed government agency created to support the local manufacturing of COVID vaccines.

But former Labor minister Andre Haermeyer believes the balance has shifted. Describing the young, self-assured class of political operatives who work in the Premier’s office, he said: “It has got to the stage where the staff in the premier’s office need to be reminded that we have a Westminster model, not a West Wing model.

“They think they are more important than the ministers themselves. It has morphed into a system where every minister has a premier’s adviser who shadows them.”

The Premier’s empire

Former and current ministers and some MPs, all speaking on condition of anonymity to preserve their positions, say decision-making in the Andrews government is largely confined to an inner circle of ministers and political advisers. There are 21 ministers in the Victorian Cabinet but of these, only four are said to have genuine influence over government strategy: Deputy Premier James Merlino, Treasurer Tim Pallas, Andrews’ preferred successor Jacinta Allan and Lisa Neville, who is currently on extended sick leave.

‘Kitchen cabinet’: Jacinta Allan, James Merlino and Tim Pallas.Credit: Scott McNaughton

This group works closely with the two most senior members of the Premier’s personal staff, chief of staff Lissie Ratcliff and her deputy Jessie McCrone. Chris Eccles was also a trusted member of this exclusive club.

The effect is twofold, say the ministers and MPs: the marginalisation of those ministers outside the circle and the broader Labor caucus, and a further blurring of where the political class ends and the public service begins. Less influential ministers make policy decisions on mundane matters but any sensitive or contentious issues are commandeered by the Premier’s office and his kitchen cabinet.

“Bracks was a stickler for cabinet process, so was Brumby,” a former minister says. “Daniel does not operate like that, he operates how he wants and gets the decision he wants.”

“We used to be involved in how this government runs and get briefings on announcements before they happened,” says another government MP. “Now we get emails after policies are announced in press conferences.”

Within Andrews’ office, there is also a group of relatively junior political advisers known as the caucus liaison unit who are tasked with briefing and listening to the concerns of backbenchers. Under the Bracks government, this was a job that the Premier did personally. “These guys are f---ing 20-year-olds. Some of them treat MPs like shit, and they’re dictating to us what we should put on Facebook and how we should run our offices,” one MP says. “We’re pretty much salespeople for [the Premier’s office].”

In the Andrews government, they complain, power over decision-making is determined less by traditional demarcations and hierarchies than proximity to the Premier. In this system, favoured departmental secretaries such as Jobs Department secretary Simon Phemister, Justice secretary Rebecca Falkingham (a former political staffer in the Bracks-Brumby era) and Moule have more direct access to the Premier than many of his ministers.

“It is not about political philosophy,” a government adviser said. “It is about the Premier’s personal fiefdom and making sure that whatever he needs to get done gets done.”

Department of Jobs, Precincts and Regions secretary Simon Phemister at the Coate inquiry.Credit:

In the government’s second term, one of the most important changes to the Spring Street power balance was a cooling in relationship between the Premier and his long-time political ally and sounding board Gavin Jennings, and the emergence of Eccles in this role. When Jennings quit politics last year at the start of the pandemic, it cemented Eccles’ position in the Premier’s inner circle.

What Eccles, Phemister, Falkingham and Moule all have in common is time spent in senior positions in the Department of Premier and Cabinet. One minister described the public service’s central agency as an extension of the Premier’s office.

Missions and a mezzanine

Victoria’s initial response to the COVID-19 pandemic showed how far things have shifted. At the height of the crisis the public service was reorganised into a series of missions, each responsible for elements of the COVID response. At the top of each mission was the head of the relevant department.

In a normal Westminster regime, the departmental secretary is accountable to their minister. On April 3, Andrews wrote to each of the mission leads making new rules clear. “You are accountable to me,” he said.

Health department secretary Kym Peake, who had also worked in Premier and Cabinet and was being groomed by Eccles to take over his job, was one of these mission heads. The Coate inquiry exposed a pronounced lack of communication between Peake and the health minister she nominally reported to, Jenny Mikakos, on key decisions taken and not taken in the hotel quarantine program. It also found that Phemister did not brief his minister, Martin Pakula, about contracting private security guards to work in quarantine hotels. As a consequence of their evidence to the inquiry, both Mikakos and Peake lost their jobs. In her findings, Jennifer Coate recommended the Public Service Commissioner examine this apparent breakdown in Westminster accountability. In response, Andrews said the inquiry had demonstrated the “need for bureaucrats to brief their ultimate boss”.

At the top of the “mission” system was a newly created peak forum for bureaucrats, the Missions Coordination Committee. Chaired by Eccles, it included the departmental secretaries in charge of the missions and additional senior personnel from Premier and Cabinet, including Moule.

Minutes of committee meetings released to the Opposition under FOI show this committee was also stacked with political operatives: Ratcliff, Pallas’ former chief of staff Sashi Balaraman and two other political advisers from PPO whose names were redacted. The Age has since established the two advisers were Jessie McCrone and policy adviser Cameron Harrison. All four advisers were permanent members of the committee but their names were blanked out from documents tendered as evidence to the Coate inquiry.

These minutes reveal that Ratcliff, alongside Eccles, played a key role in setting the committee’s agenda. Sam Trobe, then a newly appointed Department of Premier and Cabinet executive, was put in charge of a “Mission Coordination Unit” to support the committee.

Victorian Opposition Leader Michael O’Brien. Credit: Justin McManus

At its first meeting, Eccles explained that the committee was intended as a forum for the leadership of the public service and political offices of the Premier and Treasurer to “streamline and enhance decision-making”.

Moule, who chaired some committee meetings in Eccles’ absence, said the decision to put senior bureaucrats and political advisers in the same room was a pragmatic response to a fast-moving crisis. Once the second wave of infections was brought under control and the road map out of lockdown planned, the committee was disbanded.

But Don Russell says any decision to merge the public service and political streams is fraught.

“There is a separation between the minister’s office and the public service and a recognition that the role of and responsibilities of the public service is different,” Russell said. “If what you are talking about is blurring the two, that undermines the whole purpose of having the ministerial office.”

So where does this leave the Victorian Public Service?

A public servant explained to The Age he felt torn between his employment security and generous wages offered by the public service and the political partisanship openly displayed within the bureaucracy. “A lot of us feel uneasy about it,” he said. “You also feel ungrateful to complain because this government has doubled our executive ranks. There is money coming out of everyone’s ears in the public sector at the moment.”

Opposition Leader Michael O’Brien flagged a clean-out if the Coalition forms government after next year’s election. “We have to see a reinstatement of the traditional role of the public service, which is to provide fearless, frank and independent advice to the government of the day,” he says.

“When you have got a government that has inserted its political operatives into the public service then obviously it has to be dealt with.”

The problem with O’Brien’s proposed remedy is that a purge of the public service coinciding with a new government will only reinforce the impression that the politicisation of the public service is endemic. This is already a view held inside the public service.

Inside No.1 Treasury Place, the bureaucrats who work for the Department of Premier and Cabinet and the political operatives who work for the Premier’s Private Office are physically separated by a layer of concrete and steel. The private office is on the first floor, the department one floor above.

There is a running joke among public servants that under the Andrews government, a mezzanine level has been installed.