Public service bosses must raise their voices, says Michael Thawley

Tony Abbot’s former public service chief calls for “radical rethink of the place of the public service in Australia’s political structure”.

Tony Abbott’s former public service chief Michael Thawley.

Tony Abbott’s former public service chief has called for a “radical rethink of the place of the public service in Australia’s political structure”, arguing that as the “greatest single repository of knowledge on what works and what doesn’t” it needs to become “a whole lot more forceful”.

Speaking on the sidelines of the Centre for Independent Studies’ annual ideas conference at Byron Bay, Michael Thawley, head of the Prime Minister’s Department in 2014-16, suggested senior officials needed to help the government make its case.

“If they don’t stand up and put a view clearly and publicly, then of course the government is missing a very important source of authority and ideas,” he said.

In May, the Turnbull government appointed former Telstra chief executive David Thodey to review “the capability, culture and operating model” of the federal public sector and he is due to report next year.

“In this volatile, splintered environment, who is going to present a sensible and coherent picture of where Australia ought to be and the challenges that lie ahead?” Mr Thawley asked.

In a wide-ranging interview, the US-based Mr Thawley, who was keeping a keen eye on the royal commission into financial services, suggested the finance sector might have grown too big, here and around the world.

“What is the real point of the finance sector? It’s to facilitate investment, and growth of economy; it’s not an end in itself. How do we get back to that?” he asked.

Financial services, now the largest sector of the economy at 9 per cent of GDP, have tripled their share since the 1970s.

“There’s a certain point beyond which investment and consumption of the talent and resources of the country need to be spread to other sectors for the long-term health of the economy,” he said. “We’re heading towards a more differentiated financial system where you don’t have these big conglomerates.”

Mr Thawley, now vice-chairman of Los Angeles-based Capital Group, had encouraged his employer to compete for superannuation savings. “I’m always reminded every time I come out (to Australia): the fees are high here, there’s no question,” he said.

Capital Group, which actively manages $US1.8 trillion on behalf of more than 20 million clients, charged fees considerably lower than the average 1.1-percentage-point average across the Australian super system, he said.

A former ambassador to the US, Mr Thawley said it was “inevitable” the US would question the fiscal cost of supporting the global balance of power. Donald Trump has demanded allies spend more on their own defence. “It would be almost impossible for Australia to compensate for the withdrawal of the US commitment,” he said.