With its Commission of Audit, the Abbott government has made the efficiency of the public service a priority. But nowhere in the terms of reference is any attempt to establish how efficient government activities currently are.
There is a very large difference between seeking to reform a highly inefficient government, where fundamental changes may be required, and reforming a very efficient government and refining existing activities.
Although it is difficult to precisely measure the efficiency of the activities of government, it’s clear Australia’s public sector is among the most efficient in the world. This might seem like a bold claim, but data from respected international organisations make a clear case that Australia performs very well compared to similar nations.
And this should not be a surprise given the kinds of expectations Australians have of their government. We tend to compare ourselves to the high-taxing nations of northern Europe when considering the performance of our public sector in areas such as health and education. And yet our taxation levels are far closer to low-taxing nations such as the United States and Korea. Australians expect northern European services on a US budget, and largely this is what they receive.
While there are some complexities in comparing the amount of revenue different countries gain from taxation, it is possible to get a clear picture of Australia’s relative level of taxation. Contrary to some common perceptions, Australia is a low-tax country. In 2010 we were the fifth lowest-taxing nation out of 34 in the Organisation for Economic Co-operation and Development.
The achievements of the different governments are harder to quantify, as international organisations have created different measures of various aspects of government performance. The World Bank has aggregated several of these measures to create an indicator for “government effectiveness“. It also has indicators of “regulatory quality”, “rule of law” and “control of corruption”; Australia ranks highly in all of these, and all could potentially be regarded as part of the outcomes of government.
Comparing Australia with the same set of OECD countries in the same year as the tax revenue comparison places us as the ninth most effective government in 2010.
Combining these two data sets we find that, among OECD nations, we are the only one to be in the top 10 most effective governments, but the bottom five lowest-taxing governments. This is strong evidence that we have a far more efficient government than most of our peer nations.
The follow scatter diagram illustrates this by plotting rank in effectiveness against reverse rank in taxation. The nations plotted closest to the top right hand corner are the most efficient …
OECD nations ranked by lowest taxing and highest effectiveness (2010)
Source: OECD revenue statistics 1965-2010: 2011 edition, 2011; and World Bank, Worldwide Governance Indicators, 2013
The precise position of different nations on the graph could be debated. The particular methodologies of the measures making up the government effectiveness indicator could be argued over, as could the methodology of the World Bank’s aggregation. Also, superannuation payments are not counted as a tax because they provide personal benefits to the contributor, and it could be argued that this boosts Australia’s apparent efficiency in one area of public services. This means the above graph is indicative, rather than precise.
However, the clear indication it gives is that Australia does well in technical efficiency terms, delivering high outcomes for low inputs.
*This is an edited extract of Bang For Our Bucks, part of the Centre for Policy Development’s False Economies series of reports
Accepting for the sake of argument that the graph and numbers are all reasonably accurate (“close enough for government work”? Sorry…) how much would the figures shift if we were talking about 2012-13 costs and benefits? I think part of the Libs’ argument is that government has grown rapidly since 2007, so possibly we have slid down the scale in the three years since these figures were collated.
I worked in the APS for 39 years, including two years in the UK “civil service” where I was seconded to review and report on how business was done in one of their largest government agencies. Over those years I was fortunate to work for brief periods consulting in most of the major Commonwealth Goverment agencies/departments.
I also had the opportunity to visit and observe public sector activities in several other countries, including the US.
The APS is (was?) extremely efficient, and effective, in comparison with those other countries.
I say “was?” because too many of the so called “efficiency improvement” initiatives of the past twenty years have had the opposite effect to that intended. Far too many of the better people leave when offered redundancy packages (only to return as contractors, costing more, but less accountable). Numbers in some (particularly smaller) agencies are so depleted they become unable to pursue some critical activities. Irreplaceable expertise and “corporate memory” is lost. Critical skills disappear, e.g. engineers and other technical experts, and advice to Goverment suffers accordingly.
This country is well advanced in a process of ruining what was one of the best public sectors in the world. And there are always political points to be scored by criticising public servants.
Another thing that receives inadequate attention is the disappearance of the APS role as trainer of and provider of opportunities for the young.
Overall we are stuffing up something that has been of enormous benefit to this country, and hell-bent on continuing to do so.
“If the Abbott government can make so little talent go such a long way, surely the PS can two!”?
I suspect your tax comparison is flawed. In Sweden, for example, private schooling is extremely rare, and you do not have to pay private health insurance premiums. These very high charges should be added to the tax we pay, the discussion would make more sense.
The reason some people choose to send their children to non public schools and to use private medicine is Australia is because government policies, under religious and medical pressure groups, opened up those areas for ‘choice’. This was to reduce the funding and to reduce the quality available to poorer people.
In Scandinavian countries the education and health systems are for everyone so they are well funded and well run, building national unity because everyone uses them.