‘Canberra Swamp’ costs us $8bn a year

The cost of the political class, or swamp as Donald Trump might call it, has been estimated at more than $8 billion a year.

The biggest component ($5.5bn) of the $8.1bn total cost ­estimated for the 2017 financial year emerged from the growing excess of public sector average wages over private. Picture: AAP

The cost of the political class, or swamp as Donald Trump might call it, has been estimated at more than $8 billion a year by an analysis from the Institute of Public ­Affairs, which is calling for “deep-seated, structural reform to Australia’s administrative state”.

The federal government provided non-government health, div­ersity and social welfare groups more than $191 million, a further $440m went to international organ­isations such as the Inter­national Monetary Fund, while the major political parties received $62.8m following the 2016 federal election, the IPA monograph says.

“The nature of the Canberra Swamp perverts liberal democracy, entrenches established special interest and represents a gross misuse of taxpayer money,” the report says.

“The key participants in the swamp include the major political parties and their staffers, the ­bureaucracy, the major consulting firms, the bulk of the legal establishment, so-called civil society, health and welfare and environmental groups that receive government handouts.”

The US President, echoing language used by Ronald Reagan in the early 1980s, made “draining the swamp” a plank of his campaign in 2016. The Trump administration has since been famously slow to fill positions and more recently oversaw the longest shutdown in the US government.

 

Since the Coalition won office in 2013, the federal public service head count has fallen to 152,000, the lowest level since 2006, but more sweeping recommendations for consolidation from the 2014 National Commission of Audit were ignored.

An independent review of the Australian Public Service, overseen by former Telstra chief David Thodey, is due to report in the first half of this year.

The biggest component ($5.5bn) of the $8.1bn total cost ­estimated for the 2017 financial year emerged from the growing excess of public sector average wages over private. “One of the main ways through which the swamp operates is by providing higher salaries for those who are party to the swamp,” the IPA found, noting average weekly public sector earnings of $1410 in early 2017 compared with $1117 for private sector workers.

Since 2015, public sector wage growth has been higher in 13 out of 14 quarters. The government would have saved $1.24bn a year if public servants received 9.5 per cent superannuation instead of the standard 15.4 per cent.

“The Canberra Swamp is a network of vested interests so extensive that measuring the full and total cost of sustaining it is a significant undertaking; as such, this is only a snapshot, and a conservative estimate,” said Morgan Begg and Daniel Wild, the report’s ­authors.

Among the biggest beneficiaries of taxpayer funds outside the public sector were the Cancer Council, which received $39m, Reconciliation Australia ($10.1m) the Ethnic Communities Council of Queensland ($11.1m), Birdlife ($2.9m), Oxfam ($19.1m), the AIDS Council of NSW ($13.4m) and Australian and State Councils of Social Services ($14m).

Federal departments spent $585m in total on major consulting firms in 2017, including $254m by the Department of Defence.

A 2016 IPA report estimated the federal government maintained 1181 entities.

Other IPA research found excessive regulation was costing the economy about $176bn, equivalent to 11 per cent of GDP.