Nicholas Gruen was certainly in tune with the zeitgeist when he posted about the lack of vision in Australian government, especially in relation to the way governments have spent the massive revenue “growth dividend” of the last few years.
But of all people, it has been the Daily Telegraph’s Piers Akerman who has picked up Nicholas’s insight, and applied it (deservedly in my view) to the States in relation especially to GST revenue:
According to a study by the reputable think tank the Institute of Public Affairs, the reforms initiated by the Hawke-Keating governments and pursued by the Howard Government, combined with the current resources boom, have delivered revenues that have grown by an average annual rate of 8 per cent per year, 4.8 per cent greater than forecast.
The study’s author Dr Mike Nahan says the states have received a staggering $70 billion more than forecast nearly 15 per cent more than predicted.
But the people haven’t seen any benefits because the states have participated in a spending orgy which makes dole day at the local RSL look like a church picnic, and there is little to show because they splashed out on recurrent spending, principally on public service wages. …
Tasmania spent 32 per cent more, the ACT blew 21.4 per cent more, Queensland punted 19 per cent more, the NT went over by 15 per cent, NSW by 14.8 per cent, Victoria 13.3 per cent, WA 12.6 per cent and SA 12 per cent.
People in NSW have long been aware the cash was not going on infrastructure transport, health, education or security. That was all being funded, when it was funded at all, from new borrowings as it will again be today and through sleight of hand book keeping.
From data on salaries and employment levels on the public record, Dr Nahan identified the principal beneficiaries of the states’ spending spree public servants.
While the rest of the workforce relied on productivity increases for their higher incomes, the bureaucracy enjoyed an average wage growth over the three years to 2005/6 of 9.3 per cent and the state public sector workforce grew by 11.2 per cent over the same period.
Of course, Nicholas’s observation wasn’t focused on the States specifically, in fact inferentially he mostly had the Howard government in mind. Certainly the recent Costello budget (and arguably last year’s as well) largely figuratively urinated the revenue “growth dividend” up against the wall. But I think it’s difficult in a more general sense to sustain an argument that Howard lacks “vision”. It’s just that his vision is one that those on the thoughtful centre and left of the political spectrum tend to find fairly uncongenial. Smashing unions, reducing the tax burden on high income earners, facilitating economic inequality in the belief that it will fuel economic growth that will “trickle down” to the masses (which has in fact occurred at least in recent years), pursuing cautiously socially conservative policies, and boosting the American alliance at almost any cost. It’s an almost classically conservative “vision”.
In fact it’s the Labor states and territories (and by extension the federal opposition) who lack any coherent vision. They happily embrace the rhetoric and in some respects the practices of neoliberal economics as bequeathed to them by Hawke and Keating, especially the imagined virtues of Public Private Partnerships in preference to public ownership of infrastructure projects. But their lack of any considered political philosophy, to replace the social democratic ideals to which they now only pay lip service, means that they have almost by default ended up using “growth dividend” revenues to buy ongoing political office through directionless recurrent spending on the public service.
It wouldn’t be quite so bad if state governments had seriously boosted the number of teachers and nurses, and thereby made major dents in school class sizes and hospital waiting lists, but there isn’t much evidence to support that in most states. The NT Martin Labor government, for example, has done it only to a very limited extent, with modest increases in numbers of nurses and police but a much larger increase in the public sector payroll.
It’s not often that I agree with Piers Akerman.