Our public service is too big and unproductive. By Henry Innis in The Spectator.
The government has been delivering less outcomes per capita for more money per capita, and the only response to the Australian taxpayer is ‘spend more money’. That’s what the CGT debate should be really about.
We are getting less bang for our buck. Across almost every service that actually matters — schools, hospitals, prisons, the roads and rail we are endlessly promised — we are paying more per unit and getting worse outcomes. That is the textbook example of a government failing in management, failing to manage the public service and failing to deliver value for money. …
I notice this because I run a company. Founders live and die essentially on a single number: output per dollar. Every hire, every tool, every dollar of spend has to earn its place, because if it doesn’t the business dies. There is no bailout (other than dilutive VC funding or debt), no supplementary appropriation, no press release that fixes broken unit economics. That discipline is not fun, both internally and in the market, but it is the thing that makes the private sector work.
So when I look at government, I’m not being ideological. I’m behaving as a taxpayer should. I want value for money. I want to ask the obvious question: What did we get for that? Increasingly, the honest answer is ‘less than last year’. When you spend your life obsessing over unit economics and then watch the largest enterprise in the country (our government) do the exact opposite with your money, frustration is the rational response. …
The numbers tell a sad story:
The Productivity Commission finds that the non-market sector … has been going backwards on labour productivity since 2014, with the decline steepening after 2022 … Since 2021, employment in those sectors has surged about 24 per cent, more than double the 9.6 per cent in the market economy — more people, more money, flat-to-negative output.
The input side confirms it. Public sector headcount grew 3.3 per cent in 2024-25, roughly double population growth, with Commonwealth jobs up 5.6 per cent (ABS). Government spending now sits near 26.9 per cent of GDP (Trading Economics). The costs are staggeringly high.
Government spending as percentage of GDP, to 2024. Spot the Whitlam Government. Australia is now at 26.9%. It will be easy to spot the Albanese Government when the graph goes for a few more years.
Failing everywhere:
Schools. Real spending per student rose about 14 per cent over the past decade. Over the same period, Australian PISA maths results fell …the equivalent of students being more than a year behind where they were in 2000.
Prisons. … More than half of people who leave prison are back within two years, a national recidivism rate of about 52.5 per cent and rising …
Infrastructure. … Major projects run a mean cost overrun of 23 per cent. We are paying dramatically more for each kilometre we manage to actually deliver.
Hospitals. Public hospitals are the fastest-growing line in government health spending, north of $80 billion a year, yet Australians now wait nearly twice as long for planned surgery as they did two decades ago …
Cause — no accountability:
Layer on the absence of any competitive pressure, a culture that treats headcount as a proxy for seriousness and refuses to sack people, and a political system that rewards announcements over delivery, and you get exactly what we have: an enterprise with no incentive to deliver better outcomes. …
The private sector has had enough:
Imagine running a business [like the NDIS]. A product line’s output per dollar falls three years running, and your response is to triple its budget without changing a thing about how it operates. You would be laughed out of your own boardroom. In government, it’s called reform.
This is mismanagement at its most expensive — and it is precisely why the private sector is now in open revolt. Business is turning up to the government’s own productivity roundtables with the same message, because it is our productivity, our capital and our tax base being quietly eroded (Treasury). We’re all screaming about CGT not just because it impacts us. It’s because we are being asked to fund a completely out of control government. …
The private sector has spent a decade being told to do more with less. It is well past time we asked the public service to do the same. It’s time we end the era of unproductive government.
But the right people are getting the taxpayer money — that’s what politics is all about now! Get with it. SightBringer on the similar phenomenon in US cities:
The left-populist promise is that government will discipline capital and protect ordinary people.
The hidden fragility is that city government itself is staffed and run by a professional class with its own compensation demands, institutional incentives, and status expectations.
Once that class starts extracting while preaching affordability, the coalition begins to rot from inside.
Team Big Government is getting ever bigger and pricier, and the rest of us can no longer afford it.