In his Address-in-Reply to the Budget last Thursday night Opposition Leader Tony Abbott said, regarding the process of fiscal consolidation:
There is a low road and a high road to achieving a surplus. The high road is expenditure restraint and economic reform. The low road is increasing taxes and making assumptions about economic growth.
Regrettably for Mr Abbott, there is also a high road and a low road to making savings. The high road is the derivation of savings options by a rational process of analysis which preserves a reasonable match between what is expected of an agency and the resources made available to it.
The low road is the “hit and hope” method. Consider the following savings measure which Mr Abbott promised to introduce:
To rein in spending, the coalition will introduce a two-year recruitment freeze to reduce public servant numbers through natural attrition. The freeze will apply on an agency-by-agency basis, but uniformed and frontline service positions including, for example, the Federal Police, Customs and quarantine, the
Australian Defence Force and Centrelink customer service staff will be excluded. There will be no redundancies, but for two years 6,000 bureaucrats who retire or resign each year will not be replaced. This should deliver a modest reduction in public sector numbers without compromising essential services and save about $4 billion over the forward estimates.
Mr Abbott is clearly a person who is bored by detail and who has not even begun to think about this one. On his model, the gaps in public sector capability will simply emerge, the cards will fall where they will. The lack of an analytical underpinning is tacitly acknowledged by the choice of words: the coalition “will” introduce the measure, but we can only say that the measure “should” deliver the desired result.
Consider also the following:
- Mr Abbott wants to shield the Australian Defence Force from the changes, but the “bureaucrats” (always in my view a pejorative term) who support them include a large number of defence scientists who are highly specialised in what they do and whose activities are vital to the capability of the defence force on a daily basis. When a senior scientist leaves, the program he or she leads would have to be put on hold – you cannot create a senior scientist by promoting a junior one, and you cannot replace one by redeploying five clerks.
The consequences would not be trivial. For example, a major current preoccupation of the Defence Science and Technology (DSTO) is the detection and neutralisation of the Improvised Explosive Devices (IED) that pose such a danger to our troops in Afghanistan. Do we just cross our fingers and hope that none of the mission-critical personnel working on that program leave?
- As the former Health Minister ought to know, there are medically qualified people working at the National Health and Medical Research Council who evaluate new drugs and as appropriate recommend that they be approved for use in Australia. If a few of them leave, do we just accept a bit of a go-slow in the licensing of new drugs? What kind of a policy is that?
- The employment of civilian staff at the Australian Federal Police frees up uniformed police to do the work for which they have been trained. When any of them leaves we would, under Mr Abbott’s policy, face a choice of reassigning uniformed police to clerical duties, or leaving some part of the headquarters work undone.
- The full savings benefits of the recruitment freeze would be frustrated unless there were also a promotions freeze. Otherwise, when a Department Secretary resigns, retires or walks under an ACTION bus, there will be a cascade of promotions all the way down the line until the only saving is the salary package of an entry level clerk at the bottom of the totem pole.
- As always, the people whose skills are in high demand will find it easiest to leave this deadened work environment, and we will be steadily enriching the public service mix with those who for one reason or another are less attractive to outside employers.
- Assuming no promotions freeze, Mr Abbott’s policy will involve suspension of the merit principle. Departments will be able to recruit or promote people who are already inside the public service, but will not be able to recruit from outside.
The list is endless. If Mr Abbott wants to become Prime Minister, he really will have to do better than this.
And I will offer some free advice to Mr Abbott, who is also said to be bored by economics. While, unlike some economists I have met, I do not necessarily regard economics as the zenith of human intellectual achievement (I tend to reserve my admiration in that regard for mathematicians, theoretical physicists and the leading contributors to the arts), I have studied it a bit at tertiary level and the fact is that economic literacy is core business for anyone aspiring to high political office, because it is about how one takes a disciplined approach to the management of scarcity, that is, the management of access to any resource that is not available in infinite quantity. It is about deciding who wins and who loses, by how much they win or lose, and the mechanisms by which the choices are implemented. Any politician who does not have a firm intellectual grasp of that is flying blind.
As Andrew Peacock discovered to his cost in the 1980s, there is no path to The Lodge that does not have as a way-station rigorous cross-examination on ABC TV in prime time by journalists who are economically literate enough to conduct an in-depth interview on economic policy, followed by close nationwide examination by experts in the print media of every word that is uttered. Peacock failed that test, and on current form Abbott will as well.