Wednesday, March 21, 2012

Five Hundred Million

The Federal Government of Australia is broke.

Flat broke.

We know this because they keep telling us about it, loudly and insistently. And repetitively. Loudly, consistently, repetitively, vigorously and forcefully. There's no money available for nothin,' and they won't let you forget it. In In fact, it could be the only issue that Labor have communicated to us effectively over the last four and a bit years.

Whether the issue is something big, like the proposed National Disability Insurance Scheme, or something smaller, like thousands of public servants keeping their jobs instead of being sacked, the Government's response is usually the same.


'Well yes of course we'd like to build that/pay for that/let those fucking weasels keep their jobs, but this Government is committed to a position of budget responsibility. And that means that any spending the Government does must be done responsibly, and with full knowledge of the Budget bottom line and our public commitment to keep it in surplus, regardless of how counter-productive/insignificant/produced by creative accounting.'

From the time this Government came to office they've been at it; razor gang-ing this or that into fiscal oblivion. And some of this was undoubtedly right.

Putting a means test on the Baby Bonus, for example, was definitely a good idea. As will be doing the same thing to the Private Health Insurance Rebate, assuming they summon the nerve to actually do that. You'd be hard pushed to find many people opposed to the idea of denying these payments to people earning more than $150 000 a year (outside of the people already earning that figure, that is).

And some of it was undoubtedly wrong. Letting the public service shrink, for example, is not such a great idea, particularly during an economic downturn when more people than ever are relying on Government services and benefits. Nor is allowing vitally important and neglected areas like mental health and dental care to continue to go unfunded a very smart idea, at least in the long run.

But the reasons given for these cutbacks, both good and bad, is generally the same. The Government might like these projects, they may even want to enact or keep some of them, but they just can't afford to. There's no money for any of it. They're just flat broke.


'And we understand that that may make us unpopular. We understand that. But that doesn't mean we can change our position or that we will free up money just to earn a few brownie points. This government isn't about brownie points. Or any sort of biscuit points for that matter. We're a non biscuit government committed to a tough bottom line and fiscal responsibility and a budget surplus that you could take a date to the movies with and still afford the tram home afterwards.'

With this in mind, it may surprise you to hear that this same Government, your Government, the one with its pockets turned inside out and barely enough cash to keep the lights on, spends $500 million a year on consultants.

That's right, FIVE... HUNDRED... MILLION.

And by 'consultants,' we're talking about some of the worlds largest firms, companies like 'KPMG' and 'PriceWaterhouseCoopers.' Sprawling, multi national companies with fancy letterheads and those big tower blocks in the heart of whatever city you live in, the sort where security guards will chase you away if you hang around too long in the lobby.

These massive, very profitable, firms get FIVE... HUNDRED... MILLION... dollars of our taxes every year to provide the Government with... what exactly.

In a story on the topic in 'The Age' earlier this week, the journalists investigating were unable, really, to find out exactly what this money was for. In the publicly listed contracts where the fees and services were described, the payments were often listed as being for 'management services' or 'professional services.' In other words, no one has the faintest idea.

Unnamed public service sources indicated that the 'consultants' employed with this money were mostly used for policy development and implementation advice, a function that the public service itself had served, pretty tidily, for more than a hundred years. At a fraction of the cost. This reliance on consultants for this sort of work is something that has been building over a long period of time, and is now spiralling wildly out of control.

It probably doesn't need to be added, but I will, that Labor was elected in 2007 with a promise to slash spending by Government departments on outside consultants.


'Well, what I will say is this. Quite clearly, quite clearly, quite clearly, no, if you'd just let me finish. What we are looking at in this situation, is a particularly specific type of situation and one that needs to be examined with a full comprehension of this and all other situations. Further, can I just say that these remarks have been misquoted and taken out of context and that this press conference is over!'

Five hundred million dollars.

The figure itself is significant, and worth considering.

This is more money than the Government spends annually on the Bureau of Statistics, who employ 3400 full time staff.

It is also the same amount that Finance Minister Penny Wong announced, last year, that Government departments would need to cut from their spending for the year ahead. Most of these savings are expected to come from job losses.

I would wager that few would be lost at KPMG or PwC.

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