Australia is emerging as two countries with east and west divivides

Western Australia is a boom state in terms of business activity. Picture: iStock

In business activity terms, Australia is emerging as two countries. The western part of the nation – South Australia and WA – is trading strongly, while on the east coast the four states, including Tasmania, are struggling with depressed trading.

But just as we are creating two nations in prosperity, increasingly there is also a divide between the private sector – where trough trading is a forcing efficiencies – and the state and federal public sectors.

Government inefficiencies are being best displayed in health data, but overspending on administration is endemic to many parts of government.

During most of 2023-24 the part of the community not impacted by mortgage and rent stress kept up a reasonable spending rate. That boosted the results of many enterprises, which were also helped by a strong June/early July.

But then the relentless rises in the cost of living partly driven by the big spending of both the federal and the state governments began to take its toll across the community and was not helped by pockets of real estate downturn in some affluent areas.

In NSW and Victoria we’re also impacted by people deciding it was time to leave high real estate costs and, in Victoria, the state government debt. Some went to Queensland but housing costs there are skyrocketing, so increasingly the population movement is being directed to the boom states of SA and WA. Both boom states are helped by federal government GST and other subsidies.

SA is helped by arguably the best government in the land, and is actively canvassing businesses in Victoria — urging them to shift amid the prospect of substantial defence expenditure boosted further by mining.

WA is, of course, also boosted by mining but, like South Australia, WA could be impacted by the new industrial laws and the low iron ore price.

But right now the good times are rolling.

In the east both small and large enterprises must adapt. Cameron Research says in the smaller sector there is an “SME recession”.

“It’s tough out there – costs seem to have spiked up again, but SMEs are struggling to pass those costs onto customers via higher prices. Right across our SME panel, conditions have deteriorated, with the exception of those exposed to the NDIS, some of which seem to be earning 250c in the dollar.

“So in response SMEs are making four key changes: increasing use of technology; cutting costs; tweaking staffing and increasing advertising/promotion,” Cameron Research says.

Note the reference to NDIS. Many areas of the government sector have no idea how to operate efficiently and simply spray money at their problems. The large volumes of wasted money in the health sector is not confirmed confined to NDIS.

At the start of the month, I highlighted what was happening in the health area thanks to research by the Nurses’ Professional Association of Australia.

Since then, the Nurses Association has brought in experts to further study material from Canberra’s Australian Institute of Health and Welfare.

The additional research shows that overspending on administration is even worse than that documented earlier.

Nationwide, for every 10 nurses and paramedics there are four administrators. The two worst managed states are WA with 5.92 administrators per 10 nurses/paramedics and NSW with 5.12 administrators for every 10 nurses/paramedics.

Around the world, best practice requires one administrator for 10 nurses, but that requires sensible regulations and not those used in parts of Australia to clog up the system and create inefficiencies. Not surprisingly, SA is the best managed health site with 3.16 administrators to every 10 nurses/paramedics.

It’s probably unfair to pick out the health sector because exactly the same thing is happening in other areas of government which find it easier to raise taxes than improve productivity.

It’s not going to be easy to fix because in most areas of the state and federal public service there simply is not the knowledge of how to implement modern systems to carry out the tasks the nation wants them to perform.

In that context many of those in the public sector, instead of concentrating their own administration, look for problems in the private sector. Yesterday’s commentary on Treasury’s canvassing of eliminating non-compete clauses is a good example. It had its origins in work by the ANU.

Michael Tamvakologos, of industrial relations and workplace law firm Seyfarth, says the ANU paper concludes that “the existing law and practice in respect of non-competes in Australia is manifestly unfair and contrary to the public interest”.

But he says Seyfarth’s studies show that a fair examination of the available research and other material indicates that the ANU identified problems that non-competes are said to create “either do not in fact exist or, if they do, that they are not as acute or widespread as asserted”.

The ANU does some excellent work but right now the most urgent problem is to use the technology efficiencies that are being developed around the world and in Australia and apply them to our public sector.