In an era of mounting fiscal pressures, navigating the path between government efficiency and service effectiveness has become a critical priority for nations worldwide. Australia faces challenges regarding its fiscal outlook, long-term spending commitments, and the need to maintain service delivery standards that meet public expectations.
This challenge is not unique to Australia. Other governments have responded to similar challenges: The United Kingdom established the Office for Value for Money, and the United States created the Department for Government Efficiency (DOGE). However, balancing cost containment with service delivery remains precarious, particularly when public expectations are deeply engrained and aversion to change is strong.
As governments explore new tools to address these challenges, interest in digital solutions and emerging technologies like artificial intelligence (AI) is growing. By examining the key drivers of efficiency and government spending, Australia can begin to reimagine a service delivery model that is both sustainable and effective.
Balancing government efficiency and Australia's fiscal sustainability is a complex task
Government efficiency reviews conducted globally have yielded several key lessons. Firstly, they confirm that the journey to optimal efficiency is never easy or straightforward. Secondly, they highlight the critical importance of clear objectives and performance metrics to measure progress effectively. Successful reviews often emphasise data-driven decision-making, enabling governments to optimise resource allocation. Thirdly, they emphasise the value of stakeholder engagement — including frontline staff and citizens — to ensure reforms are practical and widely supported.
In addition, many reviews reveal that technology integration can significantly enhance service delivery but must be accompanied by adequate training and change management. Sustained political commitment and transparent communication are essential to maintain momentum and public trust throughout the reform process. These insights collectively guide governments toward more agile, accountable, and citizen-centric operations.
In terms of drivers of government spending, Australia’s government faces relentless expenditure pressures, from workforce evolution to mounting national security costs. Principal drivers include demographic changes such as an aging population, service expectations, societal expectations, and a significant increase in defence spending. Australia’s fiscal health is directly tied to these pressures, with debt projections set to climb significantly by 2060. Immediate structural reforms are not just necessary — they are inevitable to prevent unsustainable spending.
Building an effective trade-off framework for an optimized government
In balancing efficiency and service delivery, governments and their agencies must weigh difficult trade-offs across service delivery, cost, and risk. Understanding and articulating these trade-offs is essential for developing sustainable policies that uphold public values while applying the significant fiscal restraint required.
Effective trade-off frameworks must be evidence-based, dynamic enough to respond to evolving circumstances, and aligned with the underlying principles of the organization. Taking a structured approach to inevitable trade-off decisions can be supported by using a framework called Fit For Mission, underpinned by three layers of cost consideration: scope, structural, and execution.
This framework highlights that the most impactful trade-off decisions are made at the “scope” level — essentially, deciding “what is done” by an organization, such as whether a particular function or service should be delivered by a government agency.
Following this, structural decisions — or “how a function is delivered” — are the next most significant. It is within this level that technology trade-offs can play a big role in driving efficiency objectives. Examples may include trade-offs around government services delivered in a digital form versus via front line staff, consolidation of government service centre footprints (such as Services Australia), and remodelling or reforming entire processes enabled via artificial intelligence (AI).
Finally, execution decisions — “how well is it done” — also influence efficiency, though to a lesser extent at the individual level compared to other cost levels. Examples might include decisions about internal processes such as automation or removal of process steps (including processing claims or applications), changes in delegation limits, and departments recalibrating their structures to realise greater synergies.
As governments increasingly focus on efficiency, it is essential for all levels of government to adopt a focus on utilizing the Fit For Mission framework. Senior leaders in the Australian public service can ensure their organizations are aligned with their core mission by understanding and promoting their core purpose, aligning functions and activities to achieve that purpose, and determining the most effective methods for execution. This includes a careful examination of the allocation and use of resources — people, processes, and technology — to optimize performance and meet public expectations.
