What a terribly clever and frightening article.

Great article.  I would point out though that the majority of economists, who are unfortunately Keynesians, see no problem in governments borrowing larger and larger sums of money in order to ‘stimulate’ the economy. 

Getting public debt to replace the private debt, or in the case of the banking system privatising the profits and nationalising the debt!  If you want to acquaint yourself with the folly of this spend big approach then articles by the Austrian School of Economics are worth a read.  The Mises.org is a free library with thousands of articles on this topic and related topics. 

A warning though, when you start reading in this area you quickly realise how we have been seriously dudded by governments.  It may even convert a few pro big government people!

I did notice Bartlett made some reply about public sector numbers and said it was all superficial analysis.  He said, in effect, if you took away all the extra positions plus a couple more then numbers were actually reduced!

But even if everything Bartlett said was 100% true with no spin involved, the basic question, which he did not respond to, is are the current numbers we have in the public service sustainable?

The answer is a very clear no.  So what will the government do to rectify this crisis situation of their own making?

An excellent review Barnaby.

For me the alarm bells rang loudly when, under Lennon, the essentially government run RBF (Retirement Benefits Fund) bought a half share, from the state government, of the Hobart airport for a vastly inflated sum:

http://tasmaniantimes.com/index.php?/article/meltdown-2/

This occurred at the time Lennon was intent on providing Gunns with a pipeline down the East Tamar.

And add to that in the last couple of days: $500,000 for carers flown from Queensland when our local carers are cruelly underpaid (Lin Thorpe yet again)and the $2 billion for a 4-lane Midland highway. Government stupidity never ends. Not that the Libs would do any better: the 4-lane highway (and a cable car) was their idea, while Robin Gray ruined the economy for a decade.

Excellent article Barnaby.

If we look at how much money a wage earner has to pay for essentials (non discretionary) that portion is rising fast with further rises threatened by carbon taxes, power/water increases, rates and so forth.

Our own governments have become parasitic and are driving us broke - or have already driven us broke.

Aird has done a lovely job of confusing the populace for years, with alternate announcements of desperate black holes and amazing windfalls, but it is hard to believe his replacement will be able to maintain the facade.

The past 40 years have seen one massive credit bubble and the associated destruction of productive industry as the economy has shifted to a focus almost exclusively on consumption.

At some point, we will either go broke as a society or return to producing what we consume.

It is a subject that everyone would be well advised to learn more about. Debt and spending do not lead to wealth. Wealth comes from saving and investing those savings into production. Tasmania is a pretty good example of the situation which affects much of the Western world. Once we had manufacturing and wealth creating industries. Now we have all manner of “bringing each others washing in” type of activity which doesn’t actually create any real wealth.

Much is said about sustainability as it applies to the environment. But it also applies to economics - a debt-fuelled consumption binge just isn’t sustainable and is creating a terrible mess for future generations at least as bad as anything we’ve done environmentally. And when the economy fails, one outcome is easily predictable - the environment ends up getting wrecked too.

In 2010, Australia has become little more than a quarry for the rest of the world. We supply the materials so that others can become wealthy.

Look at the long running forestry situation in Tasmania. We cut the trees and sell woodchips to Japan. Other Australian states supply coal to Japan. Japanese paper companies process these into paper and that’s where the real economic wealth is created. It’s pure madness when you think about it - export raw materials and energy, buying back manufactured goods. A pretty sure way to turn us into a Third World economy.

and yet another $1 million plus for the shinboners - the north melbourne football club.

looks liked a good hay cutting season - must be some hay in the barn now.

4 more shopping days yet to xmas - bills to come in jan /feb 2011.

“Elsewhere, that would be a criminal act and the perpetrators would be behind bars.”

I was going to ask, isn’t this just plain fraud or theft?

I agree with Shaun.  It is why stimulus packages are a total waste of money.  Our money of course as you cannot expect politicians to pay for this sort of thing with their money.

We live in a world where economic activity masquerades as economic growth and governments see nothing wrong with it.  Governments are happy as long as they can spend money on their favourite projects, keep content their hanger-ons and spivs with employment, either through the public service or successful pre-determined tenders, and provide the bread and circuses to keep placated the ever increasing numbers of mendicants (let’s call them zombies for that is what they have become). 

But at some stage that debt will have to be repaid.  You can print money and inflate your way out of debt which is the option the US has chosen, but this is a very dangerous path.  History shows that countries that have degraded their currency to the same extent as the US invariably get hyperinflation and the total collapse of their currency.  When this occurs, not if, the consequences for world economic growth are probably catastrophic. 

When it occurs, and admittedly it could take a few years, it is imperative to have a strong economy and be in a strong budget position. 

Unfortunately, Tasmania has a weakening economy,  which is increasingly reliant on the most unproductive sector in the community (government/public service) and a very poor budgetary position.  We have no margin for error.  As a result, we have little capacity to absorb the coming shocks to world trade, economic growth and global financial issues.

There is much that the Tasmanian Government is unable to control in this scenario but one thing it can control is its spending.  Unfortunately, this appears beyond them.

And I am guessing that the author and posters above would cry blue murder when services are taken away from them if someone should have the gumption to take the knife to the public service. Everyone likes to imagine that there are hordes of government-funded bludgers out there - well, those ‘public servants’ are the people who run your health centres, your hospitals, the courts, the schools etc, and employ the doctors, nurses, ambos, teachers, police officers, librarians, park rangers, etc etc

And, as usual, we see comments on also getting rid of private enterprise that generates any real worth.

I wonder whether anyone here puts any thought whatsoever into how the current quality of life they enjoy is supported?

Not that I am opposed to rationalisation. The best thing we could do is reduce the tiers of government and duplication of services.

Thomas annonymous No9.I don’t know how others feel
but I perceive us to be grossly overgoverned by persons for whom I have little confidence in, or liking for.
Clip board Clara, Horace the Hofficious,puffed up like head turkeys.I’ve never had a job with a lanyard or security passes.The new age travellers
seem to wear them like a badge of assumed over authority.Little smells of European history,posing
to justify the job?

Britain recently took the knife to the public service and no doubt Greece and Eire have too without the same degree of Anglecentric reporting here. Too early for results perhaps but some reportage would no go amiss in what are described as newspapers but now appear to have no depth.

Creating wealth is not simply maufacturing stuff, you also need to retain and reinvest the after tax surplus value created. When that goes offshore then you are no further advanced than if you had no manufacturing.

Eslake tells Tasmanians we must be clever but as yet that message seems to have not materialized into an industry.

The problem with a reduction in anything is the unwillingness of people to sacrifice. This is the chink in the climate debate where a price on Carbon is exploited by the opportunistic as a ‘great big new tax on everything’ and the polls tell us people want change but are concerned about costs and sacrificing lifestyle. Well the alternative will arrive without change and no amount of sacrifice will change the immutable laws of physics and chemistry.

All Tasmanians should prepare for either going with less or paying more for government services. The resource rich States will not be happy paying out forever. Of course doing more with less would be a neat trick.

GM has outlined neatly a long present flaw in the implementation of our system of government.
That flaw will remain present while ever we continue to elect incompetent party hacks over independantly minded
individuals of sound character.
As for the burgoning public service numbers, of course they are, thats how they advance, by thinking of reasons to hire
underlings to supervise. Its a form of cancer, and grows until it kills its host.
While ever we have spinless representatives afraid to speak the obvious truth we will have to put up with incompetent
provision of public services. The two go hand in hand.
Simon

Properly managed cuts to public service numbers will have no effect on either the quality or quantity of services. The simple reason being there are significant numbers of public servants that have no contact with the public and have no role in services to the public. 

A TCCI report from last year or so (I think Richard Dowling was the author) found that of the 3500 jobs created over a time frame (2002-2005?!) only about 10% could be considered front line service positions.  That means 90% of those jobs created were not front line service delivery positions.  If my recollection of this report is wrong then I am happy to be corrected.

It wasn’t too long ago a review of the RHH found that if a Doctor wanted to create a new position at the hospital (maybe a specialist nurse), it took 16 or so seperate signatures/approvals to get that position advertised.  That is an impressive level of bureaucracy. 

I have seen figures here on TT suggesting cuts of 20% to public service numbers.  I reckon you could do that with very little effect on services.

The Government logo should read “TASMANIA - Exploit the opportunities”.

This Government’s schemes to get money out of Commonwealth to prop up whole areas of previously State-funded PS staff and their activities extend to Fox Eradication Program, the Macquarie Island rabbit & rodent eradication program and the Devil Facial Tumour Disease Program.

The cancer growing on the political face of Tasmania should have the people calling for the metaphorical ‘Madame Guillotine’ and the storming of the Bastille - Vive la Revolution!

Sadly alcohol, gambling and tobacco dull the pain sufficiently and all create tax revenue from the “rotten apple” State.

Philip Lowe [Comment #12] as a response to annonymous Tomas et al. “I’ve never had a job with a lanyard or security passes.The new age travellers seem to wear them like a badge of assumed over authority.”

Philip, in other circles these new age travellers are called “cool trippers” - they are generally rather mediocre workers or appeasing types that don’t rock the establishment boat in any way; they are self-serving and when the proverbial ‘shit hits the fan’ too many times they exist stage-left - hence the name! Aird is of that calibre.

Tasmania has become packed with these folk in the highest echelons. Sadly many were innocuously taught how to play this devilish ‘game’. Some have the time to reply to TT readers using annonymous nome de plumes. ;-)

Tomas 11. I just hope you don’t receive a $4,000 Hydro bill next Winter. No doubt the ‘public servants’ will have good reasons why pensioners should be getting these huge bills. Will they be told to die of hypothermia in their own homes?

This is nothing more than a strawman blog curiously elevated to the status of ‘article’ by the uncritical TT cheersquad.
I note that not one single comment questions whether the author has any qualifications in the area of economics.
It does not matter as long as one is preaching a message the church of TT want to hear.
Drake’s hysterical take on Tasmania’s economy actually reminds me of the other Barnaby.

Instead of telling us the wages bill for the State government account for 53% of the state budget, perhaps Ms Giddings could tell us what the average cost per worker equates to including the (un)funded super contribution attached to this.  I suspect the figure may alarm us all and would lead to a rational debate around the size of the state government.

Onya Virgina T…join the brigade of the Tt annonymi bloggers!

Same old game Virginia T - “Shoot the messenger” and don’t critique the message. People don’t accept that type of put-down crap any longer Madame T!

Well well, I know a bloke with a face like that of a smiling assasin, I wonder if he will stand for election to fill Michael Aird’s position in politics in Tasmania?
Oh by the way, he is not known for his monetary or fiscal control skills, yet he loves a position of power over others whom are far more intelligent than he can ever become.

#14. If only we had “spinless” representatives!

Cutting the public service by 20% based on ‘feel’ - that sounds like a good way to go. I usually like a bit of evidence before I obliterate the livelihood of others.

What the commentariat also doesn’t appreciate, that if we didn’t have a relatively fat public service then our unemployment rates would be much higher and many businesses would suffer as a consequence.

Geez editor. Can you hand poor David O a hanky so he can wipe the froth from his mouth.
David there is no law against posting anon.
If there was people like me would not be published. Simple.
So who made you god david?
It may surprise you my angry friend but it is not only the government that anonymous posters seek protection from. Take a look at the treatment meted out on TT to those who dissent from the dominant voices and the prevailing point of view. Very ugly and very nasty. So please drop the messiah complex david, it getting tired mate.
Apologies to other bloggers, i did not intend to be drawn into an argument that would derail the topic.

The demoralising thing about Tasmanian’s ballistic corruption is that it elicits so little public outrage despite being largely unconcealed.

So little stigma is attached to boodle that its beneficiaries are unabashed about defending it publicly , some in their own names.

John Hayward

Why question his economic credentials when it is his accountancy and financial skills on show?

I would like to see a concerted effort from the pro-big government side questioning the theory that Barnaby Drake has put forward.  Or does everyone agree that the State Government finances are shot?

Australian governments are bloated with public servants who contribute nothing except costs and complexity. Any defence is usually left to those who make money from their dead hand.

In today’s SMH we find…

A federal government program aimed at assisting indigenous Australians to own their own home used up nearly $10 million in administration to provide $2.7 million for just 15 loans.

The $9.9 million cost of administering the Home Ownership on Indigenous Land program was high compared with the low level of loan activity, an investigation by the Australian National Audit Office found.

and this from IPA

“State taxpayers will be forced to pay at least an additional $15.6 billion over the forward estimates period to fund public service costs, over and above that implied by existing state wages policies. The largest increase in state government staffing was in the area of administration, which grew by at least 57 per cent between 2000 and 2007.”

...and from last year’s Australian…

At the core of this is a bloated and dysfunctional bureaucracy that appears to be more preoccupied with echoing the political spin of government Ministers than focusing on the good administration of the state. The NSW Government racks up an annual wages bill of $23 billion for its bureaucracy, which exceeds 370,000 people, with more than 60 per cent involved in the areas of health and education policy. 

Tasmania can logically only go forward & upwards once the bottom is reached.

my guess is that the bell will ring for this bottom, when the tasmanian premier goes to see robin gray & ask him for the gordon-below-franklin plans & blue prints, which he no doubt retains from the time when the labor government in canberra stopped the tasmanian liberal government from building it.

If this were built , the “profits” could be partly applied to restoring lake pedder, which would put a rocket under the tasmanian tourism industry.

If this nonsence on wacking on fees &  taxes to stop tasmania from warming more were stopped, tasmania’s tourism would be even better off.

#24 There is plenty of evidence that suggests public sectors are inefficient compared with the private sector.  #28 has provided a couple of classic examples one of which was in yesterday’s paper. 

To cut the public service by 20%, and I only mentioned this figure as it had been canvassed in previous threads as the required cut to get the budget balanced, you would probably go close to the number of public servants we had 10 or so years ago.  In the last 10 years the vast majority of positions have been created in the administration areas of the public sector.

You could quite safely cut these positions and have no discernible effect on services.

I understand your concern that if you cut public sector numbers then unemployment goes up and those ‘sectors’ reliant on the public sector may suffer.  But I disagree that this would happen.  In fact I think the opposite could happen. 

It seems a bit counterintuitive so why do I think this?  Basically it is the completely different ways jobs are created in the private sector as compared to the public sector.  In the private sector a job is created from the profits of a business or anticipated profits of a business.  The new private sector job is generally a positive to economic growth. 

In comparison, a public sector job is created by additional taxes, fines etc.  Or in the case of the last 10 years or so by plundering the cash the government was supposed to be looking after (eg superannuation), increasing debt or selling assets.  A public sector job is generally a drag on economic growth because it is borne through heavier taxation and larger debt.  Furthermore, that public sector job may have as its sole purpose the creation of additional regulation and legislation that stymies or adds extra costs and time on how the private sector goes about it’s business.

A bloated public sector slows economic growth and when it becomes the dominant employer you know your economy faces severe pressures.  The Tasmanian public sector is the most bloated public sector in Australia. 

If you removed $500M from the public sector wage bill (bit under 20%) imagine firstly what the 8000 now free employees could do.  And secondly, imagine what that $500M in terms of tax cuts, regulation and licence requirement cuts and duties slashed.  How much of the private sector would respond positively to that sort of environment?  Would it make up for the $500M cut in wages?  Not immediately but it will over time and then some.

No hankies necessary VT [comment #25] and no god-delusion either and certainly no anger from moi!

Please try to come out of the annonymi closet ‘Virginia T” or “VT” and contribute to a brave new world….no fear.

Incidentally, I like “VT” better; it could stand for ‘Volunteering Tasmania’ - that’s exactly what this island needs - for the love, not the money ;-)

David its ironic that you castigate for me playing the ‘man’ yet both of your responses focussed on bullying and verballing me into not posting anonynmously.
Take it easy David.

The issue of concern is not so much the size of the public service but the waste and mismanagement that goes on.

Who has not heard stories about inefficiency and nepotism in the state public service?

A good example: there is a prime block of land in the Hobart CBD that quite a few years ago was used as a car park but in the last few years has been sitting completely empty.  The government could have either sold it or rented it out, but by not doing so has cost taxpayers probably millions of dollars.  And there is presumably some highly paid public servant in charge of it. And this is just a single example of mismanagement.

Re#32
Virginia
What more could you expect?  The anti everything brigade, the everything is corrupt and your facts and figures mean nothing because we dont like what they tell us mob will howl down any dissent from the people that actually know something or have a valid point to raise that goes against their beliefs, and blame it all on the point that you didnt actually put your name to it!!  Its utter crap.  Who cares who makes an anonymous comment?  I could make up a name and no one would be the wiser because i may sign myself as Richard Monson or someother fiction.  Would that make my comments any more valid or accepted?  Of course not.  Keep on posting under whatever name you desire..

There is a big difference between the provision of actual public services and the impositon of bureaucracy and regulation.

The former is often done quite cheaply by public servants. We’ve all heard stories of those who willingly work hard to get the job done despite the bureaucratic obstacles placed by their colleagues.

The latter, on the other hand, is where any problem lies. Those arguing for public service cuts are, when it comes to crunch, usually arguing for less red tape and bean counting, not a cut in services be it health, education, infrastructure or whatever.

We all want the water running, the lights on and an ambulance if we need one and these things can be provided more cheaply by public servants since there is no profit to pay. To the extent there is a problem, that is not where it lies.

Bemused, we people whom give, have or show inclination to the conservation of our forests, are certainly not anti our forests, nor are we anti the facts and the truth from the 2 major forest logging entities and their subservient scribes whom praise such derelict harm to our forests.

The Peter Principle states that ‘Work expands to meet time available.’ In the new bureaucracy, that principle should read ‘Jobs expand to meet MONEY available.’

Many years ago I was employed by Rolls Royce Aero Engine Division as a senior systems and business analyst and it was part of my job to analyse all existing control and information systems. In a old company that employed 56 000 people, this was a very big task.

I remember coming across one manufacturing area where factory floor checkers at the end of each day, were required to summarised all batches that had been through the factory and send a report to an upstairs department. About thirty production people spent up to fifteen minutes at the end of the day preparing these reports.

When I followed it up, there were three people upstairs in a gigantic room filled with filling cabinets, and it was their job to summarise all these daily reports and file the summary along with all the original documents. When I was asked what was the purpose of all this, they didn’t know. ‘Well’, I asked, ‘who uses this data?’
‘Oh, someone downstairs in the Engineering Department. They come in about once every two weeks and look over the figures.’
I followed this up with this department and when I asked what the information was used for, ‘We turn it into a graph. It shows a trend of how many batches are going through the shop floor.’
‘But, I said, batches can be anything from a single engine casing, that will spend a week in manufacture to a small bag of washers which are made in their thousands, so how does this show a trend when no details are present? On a single day it can vary between twenty and several hundred, but there is no value or work hours in the reports.’
‘Well, it’s a useful thing to have at our management meetings.’

The following week, on my recommendation, the entire system was closed down and the twelve years records were burnt. The people were redeployed and all the checkers saved 15 minutes a day at their busiest time. As a result the throughput on the shop floor was speeded up as the paperwork was cut back to the essentials.

This is just one example amongst many of how bureaucracy and ‘control’ can expand without adding anything into the economy and creating an unnecessary and expensive drag on enterprise. However, the people in charge of the operations will fight tooth and nail to retain these services, not because they need them, but because it adds to their figures and gives them a ‘status’ measured in terms of how many personnel are under their control and their worth in terms of their budget.

From a buraucratic point of view, results and performance are unimportant; status is what makes the world go round!

#2. Getting public debt to replace the private debt, or in the case of the banking system privatising the profits and nationalising the debt!....  Rothbard.

In Tasmania, Forestry were quick to learn this principle and it is Gunns who feed off the results!

It’s so easy to come up with glib scenarios to get rid of hundreds and thousands of public servants because of armchair observation on inefficiencies. Then there is that other furphy of the answer is in privatization. Easy answers for complex problems. I have no doubt that serial complainers would also be up in arms if we sought to, for example, privatize the provision of health, human services and our power/water supplies. Also, I wonder how many of these folk would be brave enough to sit with dozens or hundreds of PS employees to tell them that they think they and/or their work is worthless and they should be got rid of.

It is easy to be so brave and bold when you don’t have to eyeball someone or live with the consequences.

#38 The Tasmanian forestry industry is a classic example of what happens when government gets involved (both State and Federal) and distorts the natural market process.  It has zombified what should be a vibrant, innovative and world leading forestry industry.

#39 The basic question you have to answer is: Is the current numbers of public servants and the cost of their wages sustainable.  If you answer yes then the rest is immaterial.  But if you answer no how do you propose to solve the issue of unsustainable wages? 

There are no many options.  You cannot do nothing as that leads to bankruptcy.  You cannot rely on a handout from the Commonwealth.  So do you raise taxes or do you cut numbers?

I suggest the latter.  And I would more than happily stand in front of thousands of public servants and say we will offer you generous redundancy packages to leave the public sector.  And it will have to be generous as the working conditions, superannuation and wages are very generous compared with the rest of Tasmania.

And if you do offer generous redundancy packages?  There would be thousands putting up their hands as they are sick and tired of the rampant nepotism within the public service and the incompetence of the government.

#39. A deliberate attempt Tomas to distract from the pith of the article. Quote: ‘Certainly some of this total is in essential services such as health and education etc, but the larger proportion is in the civil service, GBEs or control. This section adds little or nothing into the economy, and by and large is just a heavy brake on all enterprise.’

Re #40
Like the forestry industry, the public service does not deserve any pay out and especially NOT “a generous one.”

Why should the private sector have to cop just getting their marching orders when they are no longer needed while the public sector (too used to freebies at our expense) believe they should get a whopping handout?

A handout would also only exacerbate our financial woes. It would be far cheaper (for us) to have them to go on the dole and to Centrelink.

Maybe some of those “generous wages” could be used to develop businesses and actually produce something for a change?

I’m guessing you are a public servant, rothbard?

#41 - Gerry, who says a civil service or a GBE needs to make a profit?

Despite the naysaying, Australia does quite well by its public services and what they provide. I have raised this before, but please name a handful of countries that enjoy the quality of life that you enjoy in Australia, even Tasmania. You will find the more advanced countries are also the ones that provide substantial civil services.

Sure, there are countries with more robust industry and more millionaires, but this does not equate to quality of life for the masses. Australia’s investment into public service and its public institutions has led directly to opportunities that we all enjoy, as well as our reputation in areas such as health and science.

Re#42   - put the public servants on the dole? Wouldn’t we just need more people working at Centrelink?

#43. ‘Sure, there are countries with more robust industry and more millionaires, but this does not equate to quality of life for the masses.’

There are times when I become a little confused by the comments emanting from (semi)official sources.

On another thread, we have been told that the high rates of cancer in Tasmania are due to its LOWER socio-economic status. This is stating that we have lower incomes and higher disease rates. If this is so, where is this ‘quality of life for the masses’ that you are prating?

And:- ‘Re#42   - put the public servants on the dole? Wouldn’t we just need more people working at Centrelink?’

Two extra staff at Centrelink could possibly handle 100 new ex-Civil servant benefit applications, and just think of the improvement to the economy if they actually had to WORK for the dole!

Re #43
“Despite the naysaying, Australia does quite well by its public services and what they provide.”

Some examples please?

“put the public servants on the dole? Wouldn’t we just need more people working at Centrelink?”

You obviously have never had anything to do with Centrelink.

You’re a public servant too, Tomas?