Australia needs to be more imaginative about the size of its public service and how it directs government spending, according to an economist who believes the language of his profession is being misused to stifle spending.
Dr Richard Denniss, of think-tank the Australia Institute, told a Mandarin Talks on Wednesday that countries Australia compares itself to had bigger public sectors.
Australia sits slightly below the OECD average of the proportion of workers employed in the public service, above countries such as the US but below France, Canada and Nordic countries.
“Australians have been told we’ve got a big, bloated public sector, and because of that we’re told ‘we can’t compete with China’,” Denniss said. “We’ve got a pretty small one by developed-country standards.”
While the economist in Denniss says voters should decide how big they want their public service to be, his personal belief is Australia needs a bigger public sector. He also believes spending should be cut in areas including offshore detention and in grants programs shown to have benefited government-held electorates.
“What we completely ignore is that when the public sector does some things, we ourselves don’t have to do that, and that has the potential to save us a lot of money,” he said. “There’s enormous savings for us when the public sector does some of the things that it does well.”
Areas where Denniss believes public resources and spending need to increase include child care, clean energy, and health and aged care. But to achieve this, he believes, political leaders need to leave behind an obsession with achieving budget surpluses and develop greater vision for spending.
“The idea that companies balance their budget every year is ridiculous,” he says. “Our talk about budget deficit-surplus and setting arbitrary targets is meaningless, making trivial stuff important.”
While the federal government has an expenditure review committee keeping a watchful eye on spending, Denniss argues the government should also establish a revenue review committee to consider how taxes are contributing to particular portfolios.
“There’s no annual scrutiny [of revenue],” Denniss says. “If I’m health [minister], I’m not allowed to look at the effectiveness of tax concessions to health. If I’m an aged care [minister] I can’t look at the tax concessions. For retirement incomes, that all sits under the treasurer.”
Denniss also took issue with government roles such as consultation being outsourced to consultancies. “I think it raises serious questions about how independent something is,” he said.
Referring to the Convoy to Canberra protesters as well as what he sees as a sense of forgiveness among voters for scandals such as ‘sports rorts’, Denniss said a cynical attitude among Australians had raised red flags.
“It’s become easy, and I’ll say cool, to be cynical,” Denniss said. “But really, that’s an abrogation of our own responsibility. We have to have high expectations.
“We have to sort of ask who wins from our low expectations? And I think the people with the best access who can influence parliamentarians to shovel money under their pet project. They are empowered by us having low expectations.”
Denniss also argues the cost of unemployment is too often weighed against approving economic activity that has long-term environmental consequences.
“We had a phony economic debate for the last 20 years where anything that any powerful group wanted to do was framed as this will create jobs,” he said.
One solution Denniss suggests is for state premiers to collectively consider new “populist” taxes, such as on mining or sugary drinks, to raise revenue to spend on health and education.
“We have to be very creative about how to use the structures we’ve got. Not kind of just burdened by 30-year-old structures,” he said.
“There is the capacity for state premiers to drive a positive agenda for the feds to collect more tax and to divvy up between the states.
“I want us to think big about how we can make things bigger and better.”