#treasury

We pray the Gov’t makes more $60bn mistakes!

Can the media and shadow politicians get a grip? Since when should taxpayers complain when the government makes a huge error in our favour? We can pretty much stake our lives on the fact that 99% of government programs end up way more expensive than initially budgeted for. French Submarines anyone? NBN? We should be looking at the JobKeeper revision as a massive positive.

The federal government estimated that the JobKeeper program would initially cost $130 billion. Now it appears they overestimated it by $60 billion. That was driven by the idiosyncrasies of who would be eligible at the employer end – from the self-employed to big business and everything in between.

Given the limited time window, forgive the Treasury and Tax Office for not landing estimates on target. It is ridiculous to expect they could estimate such a fluid piece of legislation.

The unwelcome arrival of COVID19 and the sudden stay-at-home orders that ensued hardly gave a generous window of opportunity to apply Japanese level precision engineering to the process.

Our only criticism lies with the drip feed approach to restarting the hibernating economy. As we mentioned yesterday with respect to the 50 US states, so many appear to be copying each other rather than making bold data driven decisions based on facts not consensus.

The reality is that the Treasury will need to make many more multi billion dollar mistakes in the spirit of JobKeeper to help mitigate the damage caused by the looking trillion dollar deficits.

Perhaps the $60 billion saving can be redeployed to building a bullet train from Sydney to Melbourne. A 20-yr project that is just the type of infrastructure spending which ticks so many boxes – relieving pressure on the state capitol cities, housing, assist a growing population and provide lots of jobs.

Why are there so many chiefs but so few Indians in the APS?

APS6.png

Did you know that your Australia Public Service (APS) at a federal level is becoming more bloated among executive management ranks?  According to the APS website, “An APS Level 6 employee would generally be required to undertake work that is complex in nature, work under limited direction with the opportunity for reasonable autonomy and accountability. Employees at this level exercise both initiative and judgment in the interpretation of policy and in the application of practices and procedures.

This first chart highlights the level of APS Level 6 (and above) positions as a percentage of total staff. It is not an exhaustive list of every single department or agency but a large cut of the main ones. CM left out the Australian Tax Office (ATO) for obvious reasons. Although a post-divorce audit wouldn’t reveal very much…we also left out the Department of Defence due to the inconsistency in the annual report data.

The Bureau of Meteorology (BoM) is the worst offender, with over 85% of the staff classified as APS level 6 or higher. A marginal lift on a decade ago. CM already reported on the poor performance of the BoM earlier in the week.

Dept of Treasury (DoT) and the Dept of Industry, Innovation & Science (DIIS) also have three-quarters of staff in senior positions. DoT is almost 10% higher and DIIS c.5% more vs 2008-2009. We literally have to get down to the Australian Bureau of Statistics (ABS) to break the 50% threshold between management and non-execs.

While there is a point to be made that some career public servants deserve to be promoted,  surely it is a fair question to ask why there are so many more chiefs than Indians in most of the departments?

Salary APS

Headcount in some departments has fallen but on the whole, the total employee cost has risen. You can see this below.

Cost Employee

Mathematically, the more junior levels would seem to be leaving these government departments as opposed to the old guard stepping down in order for APS Level 6+ percentages to keep rising.

Staff number.png

A point worth mentioning within these figures has been the amalgamation of certain departments such as the Dept of Human Services (DHS),  which includes the merger of Centrelink & Medicare (in 2009). This explains the large jump in staff numbers thereafter. Although the Department of Prime Minister & Cabinet trebling over the last decade seems somewhat excessive.

The Dept of Home Affairs (DHA) now includes the Department of Immigration and Border Protection, Multicultural affairs, ASIO, the Australian Federal Police, Australian Border Force, the Australian Criminal Intelligence Commission and AUSTRAC so the more than doubling in size does not appear inconsistent.

Salary APS.png

When analysing average salaries in these departments it is clear that the Dept of Foreign Affairs is the place to get paid. Average salaries are around $210,000, up from $170,000 a decade ago. Although given the low base, the Dept of Human Services has risen the most. Do note DHS has the best ratio of 25% chiefs to 75% Indians.

percent.png

Of course, inflation would explain away some of the salary increases over the last decade but it still stands to reason that the growing percentages of senior staff within the public service are continuing to put upward pressure on budgets.

In private enterprise, it would be unheard of to have these types of management to employee ratios. While some may argue that certain departments fulfil roles the private sector might struggle to do as efficiently, given the bulk of these public services have 50%+ management structures suggests there is plenty of streamlining that could be achieved. How is that the BoM has 85% of staff in management yet less than 3% performing the role of research scientists? Despite all that management experience at BoM how is it so many errors and mistakes are made? It literally doesn’t add up.