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The staggering cost of small government

The Coalition came to power in 2013 promising to cut wasteful spending and one of their first steps was to immediately start sacking public servants with a goal of 16,500 by mid-2018.

Whilst the government didn’t do any figures on how much this would cost, analysis gave an estimate of $1 billion in redundancy payouts to public servants even before entitlements such as leave were paid.

One influence driving up redundancy bills was the Commission of Audit’s call to reduce the number of middle managers.

An audit report released in December 2017 then revealed that government spending on management consultants had increased from $200 million in 2012-13 to $700 million a year now.

The big four accounting firms — KPMG, PriceWaterhouseCoopers, Ernst & Young, Deloitte — have won close to half-a-billion dollars in consultancy work over four years.

Professor Leo Dobes, a retired senior public servant and associate professor at the Australian National University, told the ABC that there are not enough skilled economists left in the public service, describing “a woeful lack of ability and knowledge in that area.”

Matthias Cormann, as always, had a justification.

“It helps to keep the cost of Commonwealth administration low by helping to avoid the ongoing costs which would be incurred with the recruitment of additional permanent public servants when the need for specialist skills or additional support is temporary or project-specific,” he said.

There is the added attraction that you can limit the questions you ask a private firm to look at and pass on some public money into selected private hands.

It isn’t just economists that we have lost.  Many scientists left the CSIRO with a devastating loss of expertise and waste of research.  Regulatory bodies like ASIC and the ATO were decimated.  DFAT was stripped of staff and function.

Outsourcing has been sold as a more efficient way to do things.  And hasn’t that gone well – NOT!

The cost of Government IT has spiralled from $5.9 billion in 2012-13 to nearly $10 billion a year, with 24 per cent of that going to Boeing, IBM and Telstra.

That was more than they spent on Newstart.

Yet we are plagued by stuff-ups and burdened by the few remaining public servants not having the expertise or courage to evaluate and implement better IT solutions.

The waste of money, the loss of expertise and the opportunity for frank and fearless advice, has had far-reaching effects on the capability of the government and its agencies to make the right decisions and to offer an adequate level of service.

That’s what happens when you elect people who insist that they are such good economic managers they don’t need to explain themselves or look at broader consequences or modeling and boring figures.

It’s in their DNA – “Do Not Ask”.

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26 comments

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  1. Florence Howarth

    We need more articles like this.

  2. Diannaart

    Tweeted, although doesn’t show on AIMs stats, because I like to add a bit extra.

    This is what Shorten needs to be firing back at these economic stooges

  3. Bronte ALLAN

    This just sounds so bloody typical of this incompetent lot of liars we have trying to run the country! They always talk about the gross expenditure & wastage of what Labor has done or will do, if elected, but they forget they are the ones who are actually involved in mis-management, wastage & incompetence in trying to successfully manage our economic performance. This mob continually lie about the state of Australia’s debt under Labor & how they are managing the economy far better than Labor ever could. But they fudge figures, lie, (repeatedly) about Labor’s supposed mismanagement that, it seems, a huge percentage of the voting public believe they must be very good & so much better than Labor ever could. Wrong, wrong, wrong! They always make anything to do with the government expenditure & supposed management of our economy as their cornerstone of “proper” fiscal policy. What a load of crap. Another very thoughtful & insightful article Kaye!

  4. Ill fares the land

    Here’s some insight into management conslultants. Not that I have been one, but I have worked alongside many of them over my professional life. Some are excellent; highly intelligent and articulate. But way too many are decidedly average and survive by doing two key things.

    The first is learing the language of the management consultant – a nauseating amalgam of weasel words and drivel (think words and phrases like “dashboard”, “outcomes”, deliverables’, “circle back”, “going forward” [after all, how much change can you effect “going backwards”?]). The goal is to be able to say a very large amount and to believe that a large amount is being said (no-one believes their drivel more than a management consultant or one who has learned the language to inflate their apparent intellect – that doesn’t fool a lot of people, but it fools enough that the language prospers). The second is to focus almost exclusively on consulting projects with government. Management consultants go to great lengths to keep themselves close to their “friends” in government, because the competition is intense – but the rewards are, as the article shows, massive.

    But the key question is whether management consultants actually deliver and in my experience, the answer is an overwhelming no. You can be reasonably confident that when someone peppers their discussion with “management consultant-speak” weasel words, there is a distinct possibility they are a pompous, self-deluded twerp. I have certainly regularly seen management consultants who got the chance to do an actual management job and were abject failures. One in particular was as incompetent at actual management as anyone I have ever seen in over 40 years in business – it was truly staggering to witness. Thankfully, his time in that role was comparatively short, so the damage done was minimised, but in the end it was his own powderkeg personality that brought him down, not his inability to do his job. Our own illustrious and incompetent PM is an example, not necessarily of a management consultant, but of someone who learned and always spouts the weasel-word lingo, but who has neither management nor leadership skills.

    So why do governments continue to waste billions? I suspect one reason is that governments tend to be afraid of outcomes and so rely on nitwits who can deliver what they want – nothing! But they still manage to deliver massive reports full of drivel language, so the appearance is that they: a) deliver and b) know what they are talking about. In way too many cases, neither is true.

  5. George Swalwell

    Oh, welcome back Kaye Lee!
    It seems a long time since I read her last piece.

    Once again she is in devastating form – stating
    the appalling figures and laying the blame straight
    on the cause. She is unbeatable when it comes
    to quoting the relevant, and damning, statistics.

    The ”cost cutting”, slimming-down of the public service and other bodies on the specious argument
    that this ”saves money” is totally demolished.

    The cost cutting, sacking of so many valuable people is to allow the LNP’s high-power mates to
    come in as ”consultants” – at ruinous, spiralling
    cost.

    Why do we tolerate this bunch of incompetent
    and corrupt politicians to run Australia into the
    ground? They are good at political double-speak,
    but those of us raised on George Orwell’s 1984
    know well to suspect all slogans about ”cost
    saving measures”. This is a 1984-style lie,
    meaning we give huge contracts to private
    corporate giants, at the cost of essential jobs of
    hundreds of thousands of skilled public employees.

    Bring on the Federal election a.s.a.p.
    Sadly however, I doubt if Labor will re-employ those
    valuable experts and competent administrators – at
    least not soon.

  6. pierre wilkinson

    “It helps to keep the cost of Commonwealth administration low by helping to avoid the ongoing costs which would be incurred with the recruitment of additional permanent public servants when the need for specialist skills or additional support is temporary or project-specific,” he said.
    well that explains a lot
    especially when taking a $38,000 plane trip to woo back benchers

  7. Miriam English

    What you’ve presented in this article needs to be said more often. Thank you Kaye.

    I was speaking to a friend today who rang up her telephone help line to get her bill posted out. She was connected to a person in a Philippines call center who she could barely understand, and who couldn’t understand her. She still doesn’t know if she succeeded in getting her bill posted out, but she doesn’t think so. When telecommunications companies are pulling in record-breaking profits while we have high levels of unemployment it just stuns me that the idiots in charge don’t realise the lost opportunities and what they could be gained by directly employing people in our own country.

    It seems stupid to outsource to people who can’t possibly help as much as in-house people could, and to contract out (at greater expense) expert work to people who are unlikely to be as well informed on a topic as in-house people are, while jettisoning our own experts and their invaluable store of knowledge.

    When will our country tire of these deluded ideologues?

  8. Keitha Granville

    I wonder if there are any actual figures showing the difference in cost between the current Job Active network private businesses and the CES as it used to.
    The moment things are handed to the private system and taken away from public servants – who by their denominator are here to work for the public – is when everything costs more, and that cost is borne by us as taxpayers as well as end users.

    Keep on bringing this sort of stuff up Kaye.

  9. Miriam English

    Don’t forget the rorts and downright frauds perpetrated by these businesses too. Remember the Four Corners piece on MAX Employment who routinely forged clients’ names on course documents and billed the government on imaginary things? Of course MAX Employment received no more than a slap on the wrist — I don’t think they even copped a fine — yet people on Newstart in the thousands are put through the meatgrinder and totally crushed on mere suspicion.

  10. Ben

    Just had a look for the 1997 budget papers to see if i could find the last CES figures but you know they dont have anything prior to 1998 listed electronically you need to go into the federal library to get a hard copy wonder why that is hey anyways CES was wrapped up in april 1998

  11. LOVO

    “Privatisation is where you get half the service for twice the cost”

  12. Graeme

    Another dynamic of short term consultants, project managers etc. is that they think and act in the NOW with no eye to long-term outcomes. Consultants present simple solutions that appear to meet their sponsors brief …tell the customer what they want to hear get paid and get out. PM’s are quite reasonably wary of scope creep. The problem here is that the scope is set to be easy to deliver, not necessarily to produce the best long term outcome …again do just what is asked for get paid and get out.
    In house staff are more likely to understand the business and design solutions that work now and build for the future.

  13. Kronomex

    And now we have the “PM for Standards” trying to rebrand the Steaming Reeking Pile of Dog Shit Party into the Vigorous Effluvium Aggregation of Canine Excrement Gang. Good luck with that pastor Scummo.

  14. Matters Not

    Lots of reasons for consultants – rarely relate to better public administration. For incoming Ministers, time is bought and action recommended. Responsibility outsourced. Party coffers swelled. QED.

  15. Egalitarian

    I’d remove the blockage that is the private Job Networks and go back to contacting companies for work directly. Imagine the cost saving there?

  16. Peter F

    I bet if it were a muslim doctor they were investigating there might be a different result……

  17. peter mccarthy

    This is why they stuff up IT and web based systems too. They sent the skills away and now they can’t tell if a program is fatally flawed.

  18. Andreas Bimba

    The aims of our neoliberal sociopathic Liberal and National Party governments are to:

    A. Ensure a well remunerated life for themselves and their business associates and to remain in office for as long as possible relying on their superior access to funds, a compliant mass media and spin

    B. Shrink the government sector by transferring functions to the private sector regardless of the effectiveness with meeting customer needs, operational costs or wider economic damage

    C. Deliberately ensure government service delivery degenerates over time thus helping to perpetuate the myth that the private sector by pursuing the profit motive will inevitably be more customer focused and cost effective

    D. Decrease government dependency by increasing the inconvenience and suffering experienced by recipients of government provided services so as discourage new applicants and to make recipients even more desperate to accept any job or private sector supplied service that may be available in the marketplace

    E. Help with inflating their self esteem and promoting their Social Darwinist ideology to be personally very well rewarded and for the population in general to be economically and socially stratified, with their voting base being on a higher tier with respect to access to better employment, income, housing, social amenity, education, healthcare, infrastructure, justice, public safety, exposure to pollution and so on, than the ‘lower classes’ that support competing political parties which they see as serfs or vermin

  19. Diannaart

    Absolutely, Andreas, couldn’t have said it better myself.

    In fact, aspiring neo-cons probably read something just like it before selling their souls (if they have one) and entering beneath iron arches, bearing the words Bodenständiger Kapitalismus, of Liberal HQ.

  20. Paul Davis

    As noted by Kronomex, Senator Lady McBeast has declared her department’s total innocence re the AWU raid following, unsurprisingly, by the closing of the AFP investigation. Lucretia immediately doubled down on her demands that Centre Right leader Bill Shortly (to be PM) be arrested and charged with fraud, theft, arson, treason, parking in a handicap space and anything else the AFP can find in their unsolved files, in relation to the GetUp donation ‘scandal’. It should be noted, although not by McBeast or any other of Dear Leader’s henchmen, that the DPP did not find the charges against McBeast’s staff unproven, only that they would drop them ‘cos it would be difficult to get a conviction in court.

  21. margcal

    Whether consultants or PPPs, they can’t be cheaper than government employees doing the same thing.
    Profit is always built into the equation.
    The private sector is “not” altruistic even if they’re otherwise honest, do a decent job, etc., never mind that too many are not honest, competent, etc.

    As for consultants ….
    Graeme: January 14, 2019 at 6:52 pm
    …. Consultants present simple solutions that appear to meet their sponsors brief …tell the customer what they want to hear get paid and get out….

    Graeme has it wrong. They don’t tell the customers what they want to hear so much as take dictation from the customer.
    Or so it was in the service reviews by consultants that I was involved with in two different service sectors.

  22. Kronomex

    According to a new poll, “The Advance Australia poll found 71 per cent believe the public holiday should stay where it is and 78 per cent saying they were proud to celebrate on January 26.”

    The Advance Australia poll was conducted by the IPA, which made me almost choke on my coffee from laughing. What a giant crock of steaming BS! Then there is group behind the poll, Advance Australia (https://www.advanceaustralia.org.au/) –

    https://www.heraldsun.com.au/blogs/andrew-bolt/conservative-getup-launched/news-story/7b2fd4074f2ec16a2d5dc85867af330a and as soon as you see Bolt’s name you know it’s just another bunch of RWNJ’s crying and farting into the wind.

    The most repulsive sentence in the article comes from Maurice Newman (https://en.wikipedia.org/wiki/Maurice_Newman) –

    ““We are in the position of the battle of Stalingrad … we have retreated to such an extent we need to hold our ground somewhere and start to push back,””

    How dare this excuse of a man use what happened to the Russians in Stalingrad as a comparison as to how the rabid RWNJ’s perceive themselves to be under the hammer. I think I’ll stop here before my contempt leads me to not being very nice about the whole lot of them.

  23. Kaye Lee

    Kronomex,

    This time last year The Australia Institute conducted a poll where 56% of people said they didn’t care what date Australia Day was held and 49% said it should not be held on a date that is offensive to Indigenous Australians and 47% said local councils should not be forced to hold citizenship ceremonies on January 26th.

    I guess it boils down to how you phrase the question and who you ask.

    https://www.abc.net.au/news/2018-01-18/australia-day-debate-more-than-half-dont-mind-changing-the-date/9337500

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