Does HR need to re-invent itself?

A recent article by Dean Shoesmith, President of the Public Sector People Managers Association (PPMA) declares:

"The public service reform agenda provides both an opportunity and a challenge. HR can build and establish its reputation as a key strategic function if it is at the heart of managing change, helping to facilitate service delivery redesign and building the necessary leadership and management skills for sustained public service transformation. However, if HR is preoccupied by its traditional activities, such as hand-holding line managers, then it will be left behind and its reputation as a transactional function will be reinforced."

Brave talk by Mr Shoesmith which, from our observations, is broadly accurate and true of many private sector HR departments as well as the public sector departments he refers to.

We have worked with a small handful of HR departments in 2010 who are effectively managing change and a couple of those who are the driving force behind organisational change. What is common among those who are truly working as strategic partners is an attitude of commerciality, of assessing likely risks, making informed decisions based on probabilities and swiftly implementing those decisions. Qualities more commonly found in entrepreneurs rather than traditional HR managers!

It seems HR does need to re-invent itself and be at the forefront of driving change in order to take up the available challenges and opportunities in the public sector referred to by Dean Shoesmith.
What skills, qualities and attributes do you see as essential for them to have?