Public service cuts can end up costing governments more

PARING back the public service in the name of saving money can end up having the opposite effect, a research paper to be released today argues.

Centre for Policy Development research director Christopher Stone undertook six case studies as part of Doing Less With Less, the second instalment of the left-wing think tank's three-part False Economies report.

Mr Stone concluded that shifting work from the public to private sector often resulted in the jobs being done "badly or not at all".

"While some politicians talk about doing more with less, this can in reality mean doing less with less," Mr Stone writes.

In one of the case studies argued Queensland's bigger spend on maintaining public sector skills actually achieved substantial savings.

"In 2011 Queensland spent $120 million maintaining public works skill capacity much higher than that of Victoria," Mr Stone writes.

"Queensland may have saved nearly three times what it spent, $350 million, by using that capacity to keep public works costs low."

Mr Stone used the roll out of the Building Education Revolution to illustrate his point, arguing states that spent less on public sector skills, like Victoria, spent more per sq m on the work than states like Queensland.

He said recent public sector cuts in a number of states could have federal implications in terms of waste.

"It should be kept in mind that the BER program was funded by the Commonwealth government. So the false economies of states like Victoria end up wasting federal funds," he wrote.

"Given the announcement of significant investments for infrastructure in the recent federal budget, the skills capacity of state public services, and perhaps of the Australian public service, should be of high concern to the Commonwealth government."

Mr Stone also examined the provision of public transport, education and employment, the use of stimulus, private versus public hospital efficiency and rolling out the National Broadband Network.

"The cases provide evidence that reducing government can be wasteful and inefficient," he wrote.

"They are a warning that when cuts, privatisation or outsourcing are considered, there needs to be thorough and sophisticated analysis of the costs and benefits of such actions."



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