According to Treasury secretary Dr Martin
Parkinson, the budget is replete with ''structural reforms''. According
to his boss Joe Hockey, it will ''drive the productivity required to
generate economic growth''. Sorry, not convinced.
As a
vehicle for micro-economic reform, the budget gets less impressive the
more I study it. Parkinson seems to be referring to reforms to the
structure of the budget itself, which will build ''fiscal resilience''
over the coming decade.
That's true enough in terms of
returning the budget to a sustainable surplus (business cycle
permitting). In the process, however, the budget cuts will do little to
raise the efficiency with which the government performs its own tasks,
nor the efficiency of its interaction with private industries.
Rather
than making what the government does more cost-effective, it just stops
doing as much. It makes the federal government smaller, but not better.
It's a giant exercise in cost-shifting: to people on pensions, to the
young jobless, to university students, to the sick and, to the tune of
$80 billion, to the states.
It's about crude spending cuts,
not about using science to improve efficiency. Does anyone seriously
believe imposing yet another temporary increase in the ''efficiency
dividend'' on the public service will lead to cost savings without any
decline in the quantity and quality of services provided to the public?
Hockey's
talk of productivity improvement seems mainly a reference to the
budget's increased spending on public infrastructure. I guess we
shouldn't complain about the Liberals' belated recognition that adequate
infrastructure increases the productivity of the private sector - it
would be news to Peter Costello - but the money does need to be well
spent to maximise the benefit.
Monuments and
pork-barrelling do little for productivity. And I'm not convinced the
Libs' bias - federal and state - towards expressways and against public
transport is the way to get the greatest productivity gain.
Next
exhibit on the micro-reform list would be the deregulation of
university fees. The claim that this will unleash competition and so
make the tertiary education ''industry'' a lot more efficient is so
debatable I'll leave it for another day.
Along with Tony
Abbott (St Ignatius, Riverview) and Christopher Pyne (St Ignatius,
Adelaide), Hockey (St Aloysius, Sydney) has repudiated the Gonski
reforms which would have put federal grants to schools on a needs basis.
He's left grants to private schools unreformed and unmeans-tested,
while grants to public schools will cover an ever-declining share of
their costs.
Leaving aside questions of fairness (and
partiality), this is a micro-reform negative. Adjusting grants to
reflect students' disabilities would have done much to increase the
skills, employability and workforce participation of kids at the bottom
of the distribution. It could have been done more cheaply than Labor
planned by reducing grants to privileged schools to compensate.
Medical
services account for 9.5 per cent of gross domestic product, meaning we
have few industries that are bigger, even though much of the industry
is government-owned or heavily government-subsidised.
There
is plenty of room for the reform of excessive schedule fees for certain
procedures, perverse incentives and overservicing, particularly by the
corporate sausage-machines that have been permitted to take over so much
of general practice.
The doctors' union could be obliged
to allow nurses and other health professionals to perform many routine
procedures. Many evidence-based reforms could be implemented to reduce
waste and increase productivity in public hospitals without reducing the
quality of care.
Much could be done to reduce the cost of
the pharmaceutical benefits scheme by taking a tougher line with foreign
drug companies over generics and the ''evergreening'' of patents, not
to mention the chemists' union.
Paradoxically, overseas
experience says greater efficiency can be achieved by imposing a cap on
the growth in total scheme spending, thus requiring medical
representatives to make harder choices about which new drugs are really
worth listing.
So what was done? Hockey introduced a $7
charge on GP visits, tests and scans that will be costly to collect and
will get at the corporate overservicers by hitting every patient and
will discourage the poor from seeing the doc, whacked up an already high
co-payment for pharmaceutical scripts and slashed projected grants to
public hospitals.
For good measure, Hockey stopped wasting
money on all that preventive medicine stuff. Brilliant. Must have taken a
genius to dream all that up.
Finally, ''corporate
welfare''. The foreshadowed toughness didn't materialise, save for a
brave decision to take the ethanol subsidy from a very generous
political donor. But the opportunity for sharing the pain - and doing
much to force change on a lot of corporate ''leaners'' - was missed.
