TASMANIA is at a watershed moment in the recent history of the state, facing as serious a crisis as the one in the post-Robin Gray era.
There is a need not only to eliminate the gap between declining revenues and increasing expenditures, but also to examine all Government programs for their contribution to the state’s wellbeing.
Government programs that fail to deliver or need a complete restructure soon after implementation (such as the Tasmania Tomorrow reforms) result in a huge waste of money and resources and must be avoided or scrapped.
There must be many other “Tasmania Tomorrows” still embedded in the public service.
A broad and fearless review of all Government programs and services is needed to ensure that programs delivered actually are core functions of the Government, and to identify areas where the delivery of services could be improved, reductions in spending achieved and increases in cost recovery and general revenue collection enhanced.
Premier Lara Giddings has committed to reviewing public sector spending. However, there are worrying signs that the chance to significantly restructure the public sector for the better will go begging as the Government squibs the hard decisions to avoid political damage.
We need to start by recognising the importance of increased productivity. To a public servant under threat of redundancy, increased productivity means a demand by Government to shuffle 50 bits of paper each day instead of 40. But it shouldn’t be like that. It should be about eliminating 10 bits of paper from the process.
Greater attention to cost-effective service delivery is also crucial and must be a priority for the Government. This does not mean that there is a need to curtail such services. Rather, the challenge is to deliver the services more efficiently across the entire state sector and avoid duplication within or across the three levels of government, while ensuring financial sustainability.
A restructure of Government departments and ministerial arrangements should form part of such a review to ensure one person has the whip-hand at all times, rather than several ministers overseeing the one department.
Ministers need to be more accountable for excess expenditure and poor results and show discipline in spending and meeting budget targets, with a renewed focus on tangible, relevant and real-world outcomes.
The reality now is that each and every Government spending program must be reviewed to see if it results in a genuine benefit for the state and is a core function of Government.
Every dollar spent on an economic development program must be the best use of that dollar for growing our economy. Every dollar spent on health must make us healthier. Every dollar spent on education must make us smarter.
It is clear that Tasmania has had the highest growth of all states in state public sector employees per capita over the three years to June 2010. Action must be taken to achieve an increase in public sector productivity by reducing costs and reviewing service levels.
The public sector of any state is bound to grow over time, with new demands from increasing population and a changing demographic mix. Like a tree, new branches grow and suckers sprout as organic growth and policy decisions impact.
What is noticeably missing is regular pruning to ensure that the “tree” produces an optimum crop.
The allegation that Tasmania can dispense with the equivalent of 2300 FTE positions from the public sector begs the question of what they were doing there in the first place.
Premier Giddings has so far indicated that “vacancy control” is the Government’s preferred measure for losing these 2300 FTE positions. I do not believe this is the appropriate mechanism to achieve the necessary savings.
One problem is that it doesn’t distinguish between core and non-core jobs. Imagine an AFL side needing to institute austerity measures at the same time as several star players retired. Vacancy control would severely affect on-ground performance, while leaving the club’s media department and boot-studders intact.
Vacancy control will result in the loss of productive people, probably requiring the engagement of highly paid employees – relief, agency or consultancy staff – as a stop-gap.
Forced redundancies, an option that has not been ruled out by the Premier, also have additional hidden costs in many areas, including delivery of health services, particularly mental health, and will affect small business and retail, possibly extending to more challenges to the justice system.
Before any vacancy control process or forced redundancies, a full review of the public sector is necessary to identify those areas and positions that are performing well and those that are unnecessary.
Spending restraint in other areas is also needed, and no area within Government should be immune if it is not operating as efficiently and effectively as possible.
Areas such as the use of consultants in all areas of Government should be reviewed, and all Government advertising reviewed to identify low-cost options and identify areas where cost savings can be achieved.
The current proposals for savings, while having some merit in short-term solutions, lack structural change, and will be as ineffective as the former treasurer’s Budget management strategies, proposed at the height of the global financial crisis, to avoid the situation we now face. These Budget management strategies, touted to save $116 million in 2009-10, only saved $52.5 million.
A more disciplined approach was needed, but with an election looming and power up for grabs, promises of increased spending was the order of the day from all three parties.
Certainly falling GST revenue has contributed to the current challenges. However, the lack of cash in the bank, increased costs, excessive spending and lack of growth in state revenue have contributed and need to be an integral part of a long-term strategy.
Overspending must also cease. In June 2010, requests for additional funding, many of which related to fund transfers before the March 20 election, totalled $543.3 million (including some Commonwealth grants). More than half a billion dollars above and beyond what was budgeted for, or reasonably foreseen, was spent in a year when the GFC was still having an impact locally and globally. Compared with a total of $214.9 million in June 2009 and $114.8 million in June 2008, it is reasonable to ask if this has been a responsible use of taxpayers’ money and appropriate spending in a period when finances were acknowledged by most as tight and the timing of the impact of the GFC still unfolding.
Tasmania relies more heavily on Federal Government handouts than any other state and will continue to do so for the foreseeable future.
Those who live on handouts need to run a tight ship. Infrastructure projects must be delivered on-time and on-budget. We can’t afford to build prisons that don’t imprison people, and bypasses that have to be re-routed.
Without any policy changes that reflect a long-term strategic vision (and none have yet been proposed), the Government’s cash reserves will fall to only $82 million by 2014. This is not even enough for departments and agencies to conduct their ordinary activities without an overdraft. Hay has been disappearing from the back of the barn faster than any additions at the front.
Now that Premier Giddings has admitted the problems facing Tasmania, let us hope that she is willing to take the hard decisions required and undertake a broad and thorough review of the entire state sector, before axing jobs through ill-considered means.
Ruth Forrest is the independent Member for Murchison. This article first published In Mercury: HERE
