Federal budgets are proving to be sticky

The budget papers confirm that Federal government outlays are proving to be remarkably sticky, despite every effort to trim them back to levels of a decade or more ago and despite some strong rhetoric from successive Governments and Treasurers about the need for austerity. 

Commonwealth General Government payments next year will be 25.8% of GDP, the same as they were the year before. and about the same level as they were in the aftermath of the last major recession in the early 1990s. 

The stickiness of payments stands in marked contrast to the number of employees within the Australian Federal Public Service, which continues to shrink before our eyes. Average staffing levels are back to 2006/7 levels, with the number employed falling from 182,500 in 2011/12 to a projected 167,500 next year. 

This longer-term trend of higher spending occurring at the same time as the public service workforce shrinks raises the question of who is now doing the work of the public service? Basically the answer is it has been privatised, with contractors and private firms doing the work previously done in house.

From detention centres, to child care, defence logistics, security, vocational education and policy advice, the Federal government is now still spending as much as it used to on services, but the delivery arm has shifted to the army of private providers that feature heavily in the Australian economic landscape as major employers of labour and providers of infrastructure projects.

It is no coincidence that the private consultancy firms like Deloiitte, PwC and KPMG are now the largest employers of university graduates. 

It is no coincidence that the fastest growing segment of millionaire entrepreneurs are those that run private training colleges delivering often hugely expensive courses that few finish but which cost 80% less at the still publicly owned TAFE struggling to operate down the road.

The next cab off the rank will be the National Disability Insurance Scheme, which has been designed to provide end users with the cash they need to buy services through a market rather than have them delivered by public servants instead. The Budget Papers point out that one of the main reasons the Government will continue to hollow out  is because while spending on the NDIS will crank up to over $21b in a few years time, it will employ 7,000 fewer public servants  than was planned only 3 short years ago when the agency was launched.

The budget confirms that whatever it is that our politicians might claim about Big Government and the need to fix it, it is here to stay, with the public sector now  another secure revenue stream in an economy where the boundaries between public and private have all but disappeared.