Google AI

Weekend Times


The Times

Business News

the Coalition's efficiency dividend hike may mean longer wait times and reduced services

  • Written by: Andrew Podger, Honorary Professor of Public Policy, Australian National University

On the eve of the election, the Coalition has said[1] it will impose a higher “efficiency dividend” on public service agencies over the next four years in an effort to cut public service spending and address the budget deficit.

An efficiency dividend is a measure, first introduced by Labor in the late 1980s[2], that reduces the budgets of public sector agencies by a certain percentage.

The current efficiency dividend is 1.5%, but the Coalition has promised to boost the figure to 2% for the next three years, with Treasurer Josh Frydenberg saying[3]:

What we are doing is offsetting that spending with an increase in the efficiency dividend by half a per cent, which will raise more than A$2.3 billion […] The annual departmental bill across the Commonwealth is about $327 billion. What we’re saying is it will be reduced to about $324 billion, as a result of this additional measure.

Across-the-board cuts to the public service via the so-called efficiency dividend represent a blunt instrument to achieve budgetary savings.

They have been used by both sides of politics over the years. They allow politicians to avoid taking responsibility for cuts on the pretence they are only about efficiency and that the public sector agency heads can manage them with no impact on services to the public.

Read more: Elections used to be about costings. Here's what's changed[4]

But many reviews, including by parliamentary committees[5], have revealed the efficiency dividend often does impact the level and quality of services, particularly for smaller agencies and particularly over time.

It can lead to increased charges, reduced services (for example, the Bureau of Statistics’ Year Book no longer comes out annually) and increased waiting times.

While Labor has strongly criticised the Coalition’s proposed increase in the dividend, its criticism is a little hollow as it has said[6] it will retain it.

Labor is also proposing[7] an additional cut in spending on administrative expenses through cuts to funding of consultants, contractors and labour hire – only some of which will be redirected to new public service positions.

The Thodey report

Of course, taxpayers should expect the public service to pursue efficiencies and increased productivity – administrative expenses should not be automatically increased in line with increases in input costs. In particular, there is scope to use technology better to drive down costs and improve service provision.

But this requires new investments as recommended by an independent review[8] of the Australian public service, led by David Thodey AO.

Following the Thodey report’s release in 2019, the government agreed to an audit of its current IT investments but we are yet to see that audit.

Read more: 'Sports rorts' shows the government misunderstands the public service[9]

Nor has any mention been made of new investments that might deliver the efficiencies the government expects, let alone achieve the improved services Thodey was looking for.

In the absence of a more nuanced and targeted approach to efficiency gains, there a the risk of further reducing the capability of the public service.

It is likely to mean further reducing resources for longer-term research and being less able to enhance public service wages where there is a need to attract key skills (such as in information technology).

A lazy cost-saving measure

While Labor and the unions are highlighting the likely impact on public service numbers, I would be less concerned on that score if the measure was genuinely about efficiency.

The concern I have is that this is not only a lazy cost-saving measure: it also reflects antipathy towards the public service as an institution.

We have seen this before with the imposition of staffing caps[10], in addition to the caps on administrative expenses. These have forced greater use of consultants and labour hire, even where this is less efficient than using public servants.

And we have seen it in the rejection[11] of key Thodey report recommendations, not only about removing the staffing caps but also about enhancing the role of the public service commissioner. This would have ensured more merit-based senior appointments and a more appropriate way of setting pay and conditions.

References

  1. ^ said (www.abc.net.au)
  2. ^ late 1980s (theconversation.com)
  3. ^ saying (www.abc.net.au)
  4. ^ Elections used to be about costings. Here's what's changed (theconversation.com)
  5. ^ parliamentary committees (www.aph.gov.au)
  6. ^ said (www.canberratimes.com.au)
  7. ^ proposing (www.themandarin.com.au)
  8. ^ independent review (www.apsreview.gov.au)
  9. ^ 'Sports rorts' shows the government misunderstands the public service (theconversation.com)
  10. ^ imposition of staffing caps (www.pmc.gov.au)
  11. ^ rejection (www.canberratimes.com.au)

Authors: Andrew Podger, Honorary Professor of Public Policy, Australian National University

Read more https://theconversation.com/a-lazy-cost-saving-measure-the-coalitions-efficiency-dividend-hike-may-mean-longer-wait-times-and-reduced-services-183361

The Weekend Times Magazine

Farmers Calling on Aussies and Restaurateurs to Help Save the Sydney Rock Oyster

The future of Sydney Rock Oyster farming in NSW is under extreme threat and a group of NSW farmers are urging restaurateurs and chefs to support the native Australian Sydney...

This City of Museums is Deserve to be Put on Your Wishlist, Especially if You Are a First-Timer to Australia

Sydney is a multicultural city that has a lot of art in it. You can find street art on the city's outskirts and world-class art galleries. Sydney museum are countless...

Smart Lock: The Future of Home Security and Convenience

A smart lock has revolutionized the way people think about home security. Moving beyond traditional keys and mechanical locks, smart locks bring technology and convenience together, offering homeowners and businesses a new...

What Your Metabolic Health Might Reveal About Your Neurological Wellbeing

When a GP flags a slightly elevated fasting glucose or a waist measurement that has crept up, the conversation almost always turns to the heart. Cholesterol, blood pressure, diabetes risk...

How to Simplify Your Retirement Planning with SMSF Setup Online

Managing your retirement savings can feel overwhelming, but for many Australians, creating a self-managed super fund (SMSF) offers greater flexibility and control. What’s even more appealing today is the ability...

When Your Perth Pool Needs More Than Maintenance: A Guide to Pool Renovation and Resurfacing

Every pool surface has a finite life. The fibreglass gel coat of a fibreglass pool, the pebblecrete or render of a concrete pool, the vinyl liner of a vinyl pool:...

The Biggest Mistakes People Make When Hiring Lawyers in Sydney

Choosing the right legal help can feel daunting, especially when time is short and the stakes feel high. Many people start by searching for lawyers in Sydney, then rely on...

The Importance of Quality Paint Protection for Brisbane Drivers

Shielding Your Vehicle with the Right Protection Every car owner appreciates that fresh showroom finish—the gleam of the paintwork, the smoothness of brand new panels. But once you drive out of...

Ben & Jerry’s launches ‘next-level ice cream’ phenomenon

Get ready, ice cream fans – a new ice cream revolution is coming to Australian shores! Ben & Jerry’s is today officially launching its new range of flavours to the...

hacklink jojobetjojobetjojobethacklink panelBetimbahis casino sitelerizlibrary