As the elections approach, the coalition government will try to challenge its image as a party for effective government, and the Labor party as a party with bureaucratic red tape. Callum Foote investigation into how the government has been run.
The coalition government has fired a swift blow at Australians for eight years, bragging about its efforts to keep the cost of government low while presiding over ballooning spending – Covid or not Covid.
While mastering the size of the civil service (APS), the Coalition opened an Aladdin cave for cowboys and board game girls. As an MWM survey showed, spending on consultants has skyrocketed.
The Commonwealth Government’s operating costs are expected to exceed $ 100 billion in 2021 according to the latest budget.
This is an increase of around 100% over the past 10 years and 70% from the last federal budget of the Labor Party. What is the Australian taxpayer buying with this increase in departmental spending?
Mike Keating, former secretary of the Department of Finance and then of the Prime Minister’s Department and Cabinet, between 1986 and 1996, told MWM that the real measure of government effectiveness is the ratio of the government’s operating costs, captured by departmental spending, relative to total government spending.
According to Keating, â€œAt the end of the day, government provides services. The increase in operating costs is perfectly legitimate if the government also provides more public services to match.
â€œIf the cost of providing the services exceeds the services themselves, then government becomes less efficient. “
Keating talks about how much it costs a government to provide the services of a government. This ratio is a measure of inefficiency. The lower the better.
When John Howard was ousted in 2007, the cost of running the government was $ 50 billion. This resulted in total spending of $ 221 billion sitting at a 22% ratio. Kevin Rudd’s first term brought that ratio down to 15% where it has remained roughly since then. It jumped to 17% in 2018-19, but it was a dud.
The levels for 2020-2021 were obviously affected by the pandemic response measures, which, if not taken into account, would have kept the ratio around the 17-18% levels.
At the end of the day, if all we count is the cost of running the government relative to its total spending, the two major parties are roughly equivalent in terms of efficiency, with Morrison’s government at worst around 15%. less efficient.
Civil servants vs consultants
There are other ways to measure the effectiveness of government, and that is to study how the government operates itself.
To do this, we must, according to Keating, compare operating costs to civil service salaries.
There are 150,417 Commonwealth officials. This figure is only 3% higher than 2006 levels. The civil servant level peaked under Rudd, at 167,000 in 2013, and has declined since then.
The cost of civil servants has risen 14% during that time to around $ 23 billion today. However, as a percentage of operating costs, civil servants represent a smaller and smaller share. From just over a third under Rudd, that number has been reduced to less than a quarter of operating costs under Morrison.
Over the same period, consulting spending grew from $ 360 million in 2007 to $ 1.3 billion under Morrison, an actual increase of 253%.
The ratio between APS staff and consultant expenses increased from 1.8% to 5.6% over the same period, an increase of 211%.
Overall, Morrison’s government spends a higher proportion of its budget on hiring consultants than any other government before. A worrying trend for former public servants such as Keating who said that “what government does by outsourcing a lot of government takes valuable experience away from the next generation of public servants.”
This is before considering the continued “gigification” of APS with the increasing use of employment contracts to bypass staff caps and APS award rates.
Mike Keating also addressed the other elephant in the room: What matters most isn’t really how much money the government spends, but how well it spends it.
â€œI think the current government does not really assess the performance of the programs. It essentially tries or has tried to balance the budget by underfunding many government services, even though this comes at a cost to the performance of the program.
In previous governments, portfolio budget statements contained performance measures for each program. For example, things like health care had measures of the performance of health outcomes versus costs. A labor market program would be measured by the number of people you have found based on their difficulty in finding a job.
â€œAs a result, we were able to compare a program’s effectiveness against its costs and make funding decisions based on that. “
We can look at the performance metrics for the billions spent on pork barrel operations, as the recent Australia Institute report revealed which found that:
â€œ$ 3.9 billion has been spent on grant programs at ministerial discretion since 2013. $ 2.8 billion, or 71%, has been allocated to projects in coalition headquarters. The funding clearly favored fringe seats at the expense of secure Labor seats and, in some cases, secure coalition seats. In per capita terms, the Coalition’s fringe seats received $ 184 per person in national grants, while the Safe Labor seats only received $ 39 per person.
In 2007, Kevin Rudd sealed his electoral victory by overthrowing the reputation of the Coalition for Fiscal Probity. As Howard threw billions of dollars on his re-election promises, Rudd proclaimed, ‘This kind of reckless spending has to stop.’
Five elections later, his words remain the formula for good government, even if in Australia it is more of a mirage.