Federal Politics


This budget won't eliminate waste - it will breed it

Labor's cuts to the public service are too rapid to succeed, MARKUS MANNHEIM writes

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In truth, we've had a tough budget coming for a while. Canberrans lapped up the many perks that sprang from a decade of public service growth, much of it far more rapid than was sensible. It was great for many of us, but it was never going to last.

Throughout the 2000s, the ACT's jobless rate was a mere fraction of the national figure - it still is. Promotions in the bureaucracy were relatively easy to come by. The Australian Public Service's middle-management ranks - executive level 1 and 2 officers - ballooned to the point where, in Canberra offices at least, they now almost outnumber the staff they supervise.

Sure, there was an ''efficiency dividend''. However, in reality, it was a weak brake that merely slowed excessive growth, particularly during the Howard government's last two terms. And as much as the dividend drew complaints, and was unfair on smaller government agencies in particular, it rarely worked the way it was designed to work.

Agencies ran over budget, but their ministers always managed to find spare cash. IT firms nudged the size of their government contracts ever higher, and no one dared say ''no''. The Finance Department repeatedly ordered departments to use teleconferencing instead of air travel, yet only a handful of agencies heeded the call. The Defence Department ignored it entirely.

After then Liberal leader John Howard won office in 1996, he began a three-year purge that claimed the jobs of about 30,000 public servants. It was ideologically driven, unnecessary and ultimately wasteful. His government had not only re-employed those 30,000 before it lost office, it had added an extra 12,000 on top.

Organisations that grow that quickly never grow well, regardless of whether they're businesses or government agencies. American management scholar Professor Larry E. Greiner wrote about these problems back in the 1970s. ''[Management], in its haste to grow, often overlooks such critical developmental questions as: where has our organisation been? Where is it now?'' When an organisation's budget grows rapidly, its managers tend to focus on spending the money as soon as possible, when they should be asking themselves how they can best spend the funds (or even if they should spend them). The APS is no different. As much as it's often unthinkingly and unfairly maligned, it did have some fat to trim as a result of Howard's excesses.


Yet just as rapid growth inevitably leads to inefficiencies, rapid cuts cause the same problems. That's what's wrong with this budget. The government should be trimming back the bureaucracy with secateurs; slowly and diligently eliminating waste as it's found. Instead, it's wielding an axe, taking an almighty swing and hoping for the best. (The Coalition, it should be mentioned, has learned nothing from its past, and is urging the government to swing harder.)

Finance Minister Penny Wong likes to trumpet Labor's achievements since it won office, pointing to the billions of dollars in public service spending it's already supposedly ''saved'' in areas such as IT, travel and advertising. The trouble is, many of those ''savings'' are yet to actually happen: they're built into future budget allocations. In other words, agencies are yet to adapt, administratively or culturally, to the budget cuts announced in previous years, let alone the new ones that they now face.

Wong's expectations are simply too high, and the time frame to meet her demands is too short. Many mistakes will be made. Programs or teams will be abolished before the ramifications are thought through. Good public servants will leave the bureaucracy (a few of them with handsome pay-outs, no doubt), while the more challenging task of weeding out underperformers will be put off, as it always is.

Labor deserves some credit. It slowed the APS's growth immediately after it won office. It also reports, in more detail than any government before it, on how much it spends on legal services, advertising and parliamentary staff - voluntarily exposing itself to far greater scrutiny. The government's changes to public administration were heading in the right direction, even though Labor repeatedly baulked at replacing the very inefficient efficiency dividend with a more genuine and thoughtful attempt to reduce waste.

Yet this budget undoes a lot of that good work that Labor had begun, because it's trying to do too much, too quickly. It will take years for the public service to sort itself out. All in the name of chasing a tiny surplus that no one will remember.

Markus Mannheim is a staff journalist who edits The Public Sector Informant.