JUST as the US finance industry bloated its own supposed value and its income, creating a huge ‘bubble’ that is now collapsing and threatening us all, so too Australian governments bloated their own value and income to the extent that we are all threatened with inability to pay for their extravagances and we are suffering from the huge errors that they make.

It’s clear that governments in Australia have become addicted to taking our money without regard to delivering quality service while voting benefits to themselves that are out of proportion to our ability to pay. Senior bureaucrats are getting ‘salaries’ around $500,000 per year coupled with huge superannuation payouts and lots of on-the-job benefits while working Australians are struggling to feed and clothe their families.

In Sydney for example (1) State and local charges account for more than $150,000 of a basic new house and land package. That’s $150,000 that buyers have to borrow that will cost them around $315,000 at 6.7% interest over 25 years. That’s a huge impost to place on a young family struggling to afford shelter, worse yet, it’s unnecessary. Governments are even pumping up fines to increase their income (2), thus penalising more taxpayers without reference to the effects on our society.

The charges that the government makes are not proportional to their costs, it’s just money that the bureaucrats want to have to keep their own finances in order, a job that they’re doing very badly.

Worse yet, many government departments are using our money to make our situation worse, either by failing in their duty (e.g. failing to inspect WA gas pipeline, quarantine failures), making the public work for the public service (e.g. self assessment of tax, business compliance reporting) making errors that create huge costs to the public (e.g. overallocation of water in Murray Darling),  failures of planning (e.g. insufficient new medical and trades personnel) and consuming money in ‘turf wars’.

These are the symptoms of a system of government that has run totally out of control. Departments and agencies that just increase charges to cover their blunders and exagerrated needs without reference to whether taxpayers can afford it. A system that is totally unaccountable for the money that it is consuming. A system that sells off essential services to relieve its own budgets without worrying whether taxpayers can afford to pay extra for those services (3). A system that is delivering errors, mistakes and disasters and whose only response is to spend more of our money on ‘inquiries’ and studies that do not get used.

It’s a system of government that Australia can simply no longer afford.

In the past, no elected government has had neither the ticker, the skill, nor the motivation to take on our worn out system of government. Instead elected politicians have relied on the public service for recommendations and direction.

If this ‘financial collapse’ is anywhere near as serious as forecast, now is the time for the federal government to reform the whole system of government in Australia. And Kevin Rudd is the man to do it.

It’s time

An early effect of the crisis will be a reduction of government revenues (already forecast at around $10 bn per year). From a public service viewpoint this would mean either
• decreased services (major budget cuts) and/or
• increase taxes and charges.

Both of these directions have already been flagged by all levels of government except federal, with Rudd appearing sensitive to family budgets. It is entirely possible that Kevin Rudd could rethink how governments are funded and to what extent, redesigning the system so that it is sustainable.

In a country in which milk, eggs and newspaper sales are regulated, there is no overall control over the total amount of money that our 3 levels of government take from the population. Whenever any level of government feels the need for more money, they can find ways to take it from the population.

‘NSW is paying the price for an onerous and complex taxation and charging regime, which is not only sending more and more key workers interstate but bankrupting the state. More than 25 per cent (or $150,000) of the price of entry-level new house and land packages in greater Sydney is made up of taxes and charges.’ (1)

As that article states, NSW taxing and charging regime is driving people out of the state, further reducing government revenues.

Australians are hit hard by government and other charges and are struggling to pay the bills (4) yet that doesn’t stop governments allowing charges for essentials like water and rent to increase beyond all reason (3, 5). Such increases fuel further business and job reductions and reduce total government income as well as disrupting families and social cohesion.

But what are our governments to do in the face of declining revenues?

Which services should be cut and by how much? Which services should we retain? How can we help assure that our public services both deliver valued services and are suitably rewarded?

An integrated approach

Here are some different choices:
• more efficient services that cost less and/or
• decreased taxes and charges.

How do we do it?

By eliminating waste, duplication and rework and getting services right first time, every time.

In organisational improvement work, first we need to know what the purposes of the organisation are so that we can design our processes to achieve them. This also gives us a means to determine approximately how much money is justified.

With a government system, we also need to know peoples’ capacity to pay the costs. We have to drop the ‘lucky country’ approach of a bottomless pool of money to draw from, and start determining what government services are worth and whether they are worth paying for.

Once we have a list of what we want, we can rank that list.

My list includes…
1. protect, conserve and develop the essentials for life
a) air, water, food, shelter, environment etc
2. create a secure living and working environment
3. provide efficient and effective essential services
a) health, education, transport, communications
4. stimulate the creation of new businesses and services
a) increase citizen freedoms and choices
5. increase the productivity of our citizens and businesses
6. provide a stable, predictable and productive operating environment for businesses and communities
7. provide competitive infrastructures e.g. ports, bridges
8. plan and act to provide for the future
9. assure a stable monetary, financial and economic base
10. carry out the above in a way affordable to its citizens and that exemplifies Australian values.

Even with a simple list like this, many of our governments fail the test e.g. fail to conserve or develop the essentials for life. We’re seriously short of housing, much of our water has been over allocated, we’re losing species at an alarming rate, our health services are collapsing and so on.

In Tasmania our government has encapsulated unfairness and injustice within the system by creating a two tier system that favours one industry and allows that industry to judge whether taxpayer complaints are justified. This creates an insecure and unpredictable business and social environment that fuel division and conflict.

In short, we’re forced to pay governments to stuff up our world, then pay them to inquire how and why they stuffed it up, then pay them again to correct the stuff ups. It’s not smart and it’s got to stop.

Standards

With an agreed list of priorities, we can devise standards and definitions so that we know what we want, and we’ll know whether or not we’re getting it.

For example we might define areas in which a certain standard of hospital service is guaranteed. We can then devise a Citizen’s Charter of service that defines what services we can expect and where. Such a Charter might also include a working complaints procedure that helps governments to assure that their standards are being met.

We can articulate clear goals so that anyone expecting taxpayer funding (including governments) understands the basis on which such funding would flow. We can then connect public service performance incentives to achievement of outcomes that comply with the standards.

Our system of government has us vote for individuals, many of whom are singularly incapable of managing a large complex system. Those individuals make promises that they frequently cannot keep, instead they become dependent on the public service.

While such a loose system may be tolerable in a ‘lucky country’ environment, it’s not acceptable in a recession, when jobs and businesses are being lost and governments are in deficit.

Instead, we might vote for outcomes and the political candidates then authorised to engage whoever can achieve those outcomes – no outcome – new hiring.

A new world

At the Launceston Community forum, it was apparent that a new generation has taken the reins both here and in the US.

That new generation must now get on with creating a new world that is more consistent with the needs of our times.

Any such direction needs funding and, from my observations, our system is awash with money that is being misapplied or totally wasted.

From our calculations, between $50 bn and $100 bn per year is available for new initiatives and savings without making serious cuts in services.

Let’s hope that Lindsay Tanner sees it the same way and doesn’t become a victim of the federal bureaucracy.

Watch this space.

Mike Bolan
http://www.abetteraustralia.com

Mike
is a complex systems consultant, change facilitator and executive and management coach.

1. http://www.smh.com.au/news/opinion/triple-whammy-on-taxes/2008/11/08/1225561196473.html?page=fullpage#contentSwap1
2. http://www.smh.com.au/news/opinion/miranda-devine/on-the-nose—how-decent-drivers-pay/2008/11/07/1225561134605.html?page=fullpage#contentSwap1
3. http://www.news.com.au/heraldsun/story/0,21985,24615504-661,00.html
4. http://www.news.com.au/couriermail/story/0,23739,24568110-952,00.html
5. http://www.news.com.au/dailytelegraph/story/0,,24196490-5001021,00.html

This article is based on a submission that I made directly to Minister John Faulkner after the Community Cabinet. He promised a full response and I will report on that when possible.

Mike Bolan This article is based on a submission that I made directly to Minister John Faulkner after the Community Cabinet. He promised a full response and I will report on that when possible.
In Tasmania our government has encapsulated unfairness and injustice within the system by creating a two tier system that favours one industry and allows that industry to judge whether taxpayer complaints are justified. This creates an insecure and unpredictable business and social environment that fuel division and conflict.