The Commonwealth Government is talking tough on fiscal policy. Kevin Rudd, Wayne Swan and Lindsay Tanner want to bring in a surplus of at least 1.5% of gross domestic product in May’s Budget. They have to, to back up their equally tough line on monetary policy. But they’re just one level of government. What are the states and territories doing?
We are now living in a kinder, gentler era of ending the blame game, but there are eight other budgets out there with varying degrees of impact on our national economy. How are their authors and implementers going to play their part?
All we’ve seen from the states so far was last week’s scramble for health funds. There was nothing new in the states’ reactions there – and nothing new in the bitching and moaning and gimme, gimme, gimme virtually all the state representatives offered.
That bitching and moaning, however, was nothing compared to the cries of fury that went up last June when the Liberal Party’s in-house think tank, the Menzies Research Centre, released its State of the States report.
That was considered a cruel, unjust, [insert pejorative here] and partisan attack by the nasty Howard Government. Its economics, though, are worth revisiting in the current climate.
The report, prepared for the Menzies Research Centre by the Asia Pacific head of economic consultancy CRA International, Henry Ergas, found that the states and territories had received a substantial revenue windfall in recent years as a result of the GST and mining booms, but invested very little of it infrastructure.
Instead, it was mainly spent on government services, but not in a way that benefited taxpayers.
The report showed most of the increased spending on government services had taken the form of increased wages and salaries for public sector employees. It claimed the productivity and effectiveness of government service provision had not improved at anything near the rate of increase in public sector remuneration.
“The increased real expenditure per person on government services suggests a decline in productivity of State and Territory government service provision, at least since 2002-03,” the report read.
“This suggests that in recent years taxpayers have been getting less ‘bang’ for their tax dollar.”
It concluded; “[T]he non-performance of the States and Territories is placing a hand-break on our economy and our progress as a nation.”
The Prime Minister said on Monday: “The national government faces a very full economic policy agenda indeed.”
But it’s not just the national government. There are eight others. They are all Labor. Will they all pull together? Can Canberra get the states and territories to play their part?
Did the author really mean “hand-break”! This is a function of masturbatory fatigue. The context tells me that the author really meant “hand-brake” – or did he?
I wonder how Howard’s larger than ever-before Commonwealth Government would have measured up using the same Menzies Research Centre methodology? The tone of this report is incredible. Who do they work for now?
Hardly need Libs to tell you what all Australians know – state Labor governments have squandered a boom time revenue bonanza with little to show. This was confirmed by Rudd-Labor campaign that was essentially a state campaign against failed Labor govts.
Opps! my previous comment was half-cocked, so to speak. I shot off my last missive before I had read the whole article. I now see that the author wants to know if all the states “will all pull together?” or, even further, “play their part?” Such is govt!?