Cutting down mountains

Posted: May 4, 2016 in Ranting
Tags: , , , ,


I am old enough to remember the good old days the Budget was a relatively straight forward thing – increases in the prices of cigarettes, postage stamps etc. These days the guaranteed fixture is maintenance of and sometimes increase in public service funding cuts, particularly that of the public service efficiency dividend. But what is the efficiency dividend and what does it mean?

The efficiency dividend simply means that the funding of government departments and other institutions such as the National Library of Australia is reduced each year by a fixed percentage. The concept of the efficiency dividend was first introduced way back in the 1987-88 financial year as part of a range of public sector reforms and at the time replaced the concept of targeted cuts to individual departments. And it has never gone away. And it is called a ‘dividend’ because in theory the concept of improved efficiency means a need for less funding which becomes the equivalent of those organisations giving back a portion of funding each year, not unlike the concept of a company paying dividends to its investors.

There are plenty of Australians who are critics of the Australian Public Service. I was one of them until I actually found myself in the APS starting in 1993 and was able to experience things from the other side. And attacking the lazy fat cat bureaucrats is always seen as an easy vote winner by both sides of Parliament. But what is the real impact of the dividends?

The core problem with the concept of the efficiency dividend is the underlying assumption that each and every year there is some form of waste present, ready to be fixed up and delivering services better. Ironically it was then-Senator Bronwyn Bishop who used to lead the cry at Senate Estimates at how terribly wasteful everyone else was. However it is essentially a flawed reasoning. At the end of the day the reality is that as funds are continually cut, the ability to deliver various services is compromised. For example in recent times the media has been noting problems in processing welfare items at Centrelink, driven in part by issues with a processing system unable to cope with the amount of claims being made. But the fancy system introduced in recent times is a product of funding cuts which meant staff cuts and therefore a need for a finding another way of essentially doing it for less and thus enter the new processing system and any systems flaws that may accompany it.

There is plenty of anger in Australia against the corporate sector. A lot of that anger is being directed against multinationals who are quite deliberately structuring their finances to ensure they pay next to no income tax on high levels of earnings. This Budget is funding a program at the Australian Tax Office to go after those offenders. Except this funding is only part of the funding that has previously been removed from the ATO funding allocations. The ability to pursue those multinationals had already been compromised by funding cuts including the efficiency dividend. It has previously been revealed that the ability of regulators such as the Australian Securities and Investments Commission to pursue corporate wrong-doers has been compromised by the continued funding reductions.

There has been plenty of media coverage of the decision by the CSIRO to reduce the monitoring and modelling of climate change functions. That redirection of effort has been at least in part driven by the continuing funding cuts including the efficiency dividend, compromising the CSIRO’s ability to continue with those functions as well as exploring solutions. To do one means compromising on the other.

At the end of the day, all too often while the funding keeps being cut, the functions still exist. The ability to deliver functions is all too often compromised. And as jobs disappear due to the cuts, again all too often the functions are dumped on other people on top of existing workloads. Or they aren’t done properly or even at all. Consequently the service delivery has been compromised. The recipients of those services are being short-changed.

The reality of the public sector dividend is that it is a generalised funding cut across the board and it only ever had a finite effectiveness before the delivery of services was going to be compromised. And that point has well and truly been realised. Yet both sides of Parliament still see it as an easy Budget issue – keep on cutting funds from the public sector. However even the biggest mountain is eventually going to fall down if enough pieces of its base are moved over time.

Ross sig

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