Policy capacity implies the presence of a range of individual skills, work activities and organisational abilities that combine to facilitate high-level performance of the policy function in an organisation. In the context of increasingly complex public policy issues and processes, high-level policy capacity is a key objective for public sector development in Australia and internationally. Since the late 1970s, several administrative reviews have assessed the ability of the Australian Public

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... vice (APS) to meet the demands of a changing and increasingly complex public governance environment. Policy capacity has persistently been identified as an area for improvement in these reviews, resulting in repeated attempts to address deficiencies. Why APS policy capacity has failed to improve despite these attempts is unclear; however, persistent negative assessments of APS policy capacity suggest a failure of reformers to identify critical obstacles to the development of policy capacity in the APS environment. The importance of policy capacity to policy performance necessitates clarifying how the conditions for effective policy capacity can be shaped by environmental factors and how conditions might be engineered for improved performance. This study considers these issues through examination of policy capacity in APS social policy agencies. Performance and accountability instruments are key tools for establishing performance and behaviour in an institutional setting and have acted as key tools for reform of policy performance within the APS. However, how performance and accountability instruments determine the level of policy capacity in the APS environment, how policy capacity is built and the influence of contextual factors on policy capacity remain under-examined, implying some assumptions underlying past reforms of these instruments are untested. Performance and accountability instruments, like all administrative instruments, must meet multiple objectives in their implementation including administrative functionali [...]