US Republicans Downunder

My opinion piece in today's Canberra Times looks at the local impact of the Coalition's promised 12,000 public service job cuts.
Abbott Plans to Cut APS Heavily, Canberra Times, 20 January 2012

If US politics is the greatest show on earth, then the Republican Primaries must surely be Comedy Central. And no candidate is more radical than libertarian Ron Paul, who believes that there should be no income tax, no foreign aid, and no unemployment benefits. Among Ron Paul’s promises is a plan to abolish five government departments, getting rid of 10 percent of US public servants.

If you think this sounds radical, you may be interested to know that Tony Abbott’s promises are only a little less extreme. In the last election, the Coalition committed to getting rid of 12,000 public servants – around 7 percent of the Australian public service.

Some in the Coalition have claimed that they will exclude front-line services from the cuts. If so, the impact is likely to fall hardest on Canberra. And with the Coalition $70 billion behind in their budget costings, 12,000 may be just the beginning. As Shadow Treasurer Joe Hockey told ABC News Breakfast last year: ‘If you want to start with cuts we have said we will cut 12,000 public servants out of Canberra. That is the starting point.’

As many Canberrans will remember, this is what happened in 1996, when the Howard Government won office. Despite promising only modest cuts to public service job numbers before the election, the Howard Government slashed tens of thousands of public service jobs in 1996 and 1997.

The impact of Howard’s public service cuts stands out clearly in the statistics. Comparing economic indicators in the ACT with the rest of Australia over those two years, I estimate that the impact of Howard’s public service job cuts on the ACT was to:

  • Slash $25,000 from the price of the average Canberra home (in an era when house prices were much lower than they are today);

  • Increase the ACT unemployment rate by 1 percentage point; and

  • Increase personal bankruptcies in the ACT by around 100 per year.

Canberra’s home owners, workers and small businesses cannot afford a repeat of 1996-1997.

In a Groundhog Day moment, the Coalition is again assuring voters that cuts will only occur through ‘natural attrition’. Yet when pressed on the ABC’s Lateline program, Joe Hockey admitted that he was contemplating disbanding the entire the Department of Climate Change. It strains credulity to think that entire departments can be abolished without anyone being fired. (And because 3/5ths of the public service are women, a majority of those who lose their jobs are likely to be female.)

Faced with the facts about what the Coalition’s 12,000 job cuts will do to Canberra, the Coalition often resorts to scaremongering about the efficiency dividend, a policy that has been in place since 1987-88. What it fails to recognise is that since Labor came to office, the number of federal public servants has increased modestly every year, from 155,417 in 2007 to 166,495 in 2011. Even when the efficiency dividend was increased to 3.25 percent in 2008-09, the size of the federal public service continued to increase. As the population grows and the electorate demands more from government, this is as it should be.

Comparing the efficiency dividend to 12,000 job cuts is like comparing a scalpel to a chainsaw. An easy way to see this is to look at the Coalition’s own costings from the 2010 election, which estimated the ‘savings’ from 12,000 job cuts at $3.8 billion, compared with less than $1 billion from its proposal to boost the efficiency dividend.

When they’re not in the nation’s capital, Coalition representatives are proud to talk about their plans to cut 12,000 Canberra public service jobs. That’s because deep down, they regard government as the problem, not the solution.

But in my experience, that’s not how most Australians think about public servants. When floods and fires hit, we’re proud of employees in public service agencies like Medicare and Centrelink who help people back on their feet. When Australians get into trouble abroad, we look to consular officials from the Department of Foreign Affairs and Trade to help out. One of the reasons that Australia avoided the Global Financial Crisis was the rapid fiscal stimulus put in place by Treasury and the Australian Taxation Office.

Unlike US Republicans, most Australians are fundamentally optimistic about the ability of government to create opportunities and provide much-needed services. In his attacks on hard-working public servants, Tony Abbott misreads the national mood. Australia deserves better than Tony Abbott and his commitment to 7/10ths of Ron Paul.

Andrew Leigh is the federal member for Fraser.

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