Thursday, August 09, 2007

Labor's looming razor gang

Labor has foreshadowed multi-million dollar cuts in the public service should it regain office, declaring that “the days of big government are over”.

Addressing the National Press Club yesterday Labor’s Finance spokesman Lindsay Tanner said that public service employment had grown much faster than overall employment since the start of the decade.

Whereas total employment growth had been 15.1 per cent, public service employment excluding Defence, ASIO and the AFP was 25.3 per cent.

“The number of senior public servants has soared by an astonishing 44 percent. The number of ministerial staff has increased by 30 per cent since 1996,” he said.

“Individual agencies seem to get more money whenever they ask for it...

...According to former head of the Budget Division of the Department of Finance, agencies are double-dipping. They’re getting routine annual funding for depreciation, and special new budget allocations for projects like IT upgrades.”

Mr Tanner said that if John Howard had been spending at the same rate as the former Labor Prime Minister Bob Hawke at the end of the 1980s, government spending would be nearly $17 billion lower.

Even though the Australian economy was growing strongly, the government’s own Budget projections suggested that by 2009-10 government spending would be 0.5 per cent of GDP higher than in 2005-06.

“The party of small government is not the party of small government any more. The Financial Review is now calling John Howard the father of big government in Canberra,” the Shadow Minister said.

Mr Tanner announced that under a Labor government Ministers’ staffs will be cut by 30 percent to return to 1996 levels, departmental liaison officers “who act as de facto electorate support staff” will be cut and the Government Communications Unit will be abolished. MPs printing allowances will be cut from $150,000 to $100,000.

He said the package of savings was costed at $209 million over four years would come on top of previously announced savings of $3 billion.

Among the agencies to be cut would be the National Capital Authority, the Department of Employment and Workplace Relations, Digital Australia, and Invest Australia.
“Instead of getting a new handout every time they ask, agencies will be expected to do more with existing resources”.

Describing the Minister for Finance as “Santa” rather than Senator Minchin Mr Tanner said it was extraordinary that governments $10 billion dollar water plan and the $45 million takeover Tasmania’s Mersey Hospital were developed without input from either the Department of Finance of the Treasury.

“The water plan wasn’t considered by Cabinet. A $350,000 contribution to the building of a jewel encrusted horse-drawn carriage as a private gift to the Queen was. Spending on the carriage was approved by Cabinet without anyone actually checking the project was genuine. What kind of government runs the nation’s finances like this?” he asked.

The Treasurer Peter Costello had been correct to describe Mr Howard as a big spender. The mining boom had “drowned the government in revenue” and spending discipline had collapsed.


Bring Back CL's blog said...

John Howard is merely gogh Whitlam in good economic times

derrida derider said...

"the days of big goverment are over"

Anybody who believes that is fooling themselves - like it or not an advanced economy needs lots of public services, and these services tend not to be easily mechanisable (that is, their real price is rising relative to things that can be mechanised).

So they so take up an ever larger proportion of human effort - ie become an ever larger part of the economy. It's called "Baumol's curse", and it's why even Maggie Thatcher was unable to reduce the share of GDP going to taxes, why the Howard government is the biggest spending Oz government ever, and the Rudd goverment will be bigger still.

Faulty economic logic aside, it seems clear Rudd is gonna take Machiavelli's advice to get the harsh measures out of the way quickly so as to "dribble out" the good news. After all that's what Howard did in 1996. Expect the next budget to be a shocker; I wouldn't invest in Canberra real estate at the moment.

Oz said...

While a ALP member and not big on the entire small government mantra I have no problem with some of the cuts Tanner is suggesting.

One thing I do wonder about is that if DEWR is abolished another Dept will have to be created or take over some of its functions. Either way it may mean a lot of redundancies as DEWR has been recruiting like crazy. 200 graduates last year I believe and more on the way.

Peter said...

Dear Bring Back...

Boy do I agree with you.

Dear D, I agree with you too. Tanner does too. Have a read of his speech through the link. I think what he meant (but didn't say) was that the era of big government for big government's sake was over.

Dear Oz,

It is not clear from his speech whether he intends to abolish DEWR or just cut its size.

I understand that every worker being taken on by DEWR is being told that if they want the job, they have to sign an AWA.

Bring Back CL's blog said...

agree with DD however it is noteworthy that the only decent cutting of Government spending comes in the first term.
Will Ken emphasise the deterioration in the structural budget?

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