Getting rid of waste & poorly directed spending means money can be reallocated to initiatives that actually work. Over time, problems will be solved and costs will reduce.
by Nyunggai Warren Mundine
In keeping with tradition the Treasurer has been paving the way for a tough May budget with warnings on the state of the books and strong language about putting the budget on a sustainable pathway.
We’re accustomed to political rhetoric before the annual Federal Budget. It softens the public in advance and tests proposals in the public eye before final decisions. Oppositions use the pre-budget period to criticise the government for decisions it hasn’t yet made and for anticipated broken promises. The general public would be forgiven for thinking it’s purely a political game, not real money and real problems.
Most people don’t understand how the economy works. However, most people do understand that if you spend more than you earn you’ll be in debt and if you keep doing it year on year you’ll end up under massive and unsustainable financial strain.
It’s no different for the country. Each year the Federal Government is spending more than it earns. Treasury estimates that this year we’ll spend over $40bn more than we earn and next year over $30bn more. And we’ll keep spending more than we earn until 2024. Each year the shortfall is added to government debt, currently $300bn and expected to rise to around $700bn by 2023/24 if nothing changes.
The May Budget will be tough and it has to be. And spending on Indigenous programs won’t be immune from the budget repair.
My focus, and that of the Indigenous Advisory Council, is to turn budget cuts into an opportunity to properly reform Indigenous affairs once and for all. Because, despite thousands of programs across Australia trying to eliminate Indigenous disadvantage, very little is changing. Money is spent but outcomes aren’t realised.
Far too much money ends up funding bureaucracy, duplication, red tape and waste. I know this. Governments know this. And Indigenous people know this too.
Indigenous housing is a case in point. The cost of new housing is overly expensive because of structural inefficiencies in the tendering and building process. Despite the expense, many houses aren’t built to minimum building standards. The value of the housing deteriorates too quickly and maintenance programs are poorly operated.
All of this costs governments money without benefiting Indigenous people. I’ve heard of one instance where a plumber was flown to a remote community from Darwin to replace a washer. All up the exercise cost more than $1,000. That’s $1,000 of “Indigenous spending” paid to a tradesman and an airline. Meanwhile, people say there are no jobs in Indigenous communities.
Public infrastructure assets like housing, health facilities, schools, roads, playgrounds, pools and airports should be managed as a portfolio of assets with forward maintenance programs to maximise asset life and maintain proper standards; regular scheduled visits to minimise the number of instances outside specialists need to fly in; and training community members in basic maintenance tasks like changing washers and in trades for more complex maintenance.
Remoteness isn’t the problem. Defence has a large portfolio of infrastructure assets all across Australia in good working order. Defence housing is backed by private sector investment through Defence Housing Australia investment program. We should be looking at this kind of approach for Indigenous housing too
We need a complete audit of infrastructure in Indigenous communities and a program to start managing it properly. This will help close the gap and save public spending.
Spending in Indigenous affairs is also poorly directed, focussed on activities not outcomes, wedded to programs but not holding them account to deliver. Closing the gap isn’t about programs. It’s about eliminating disparity between Indigenous and other Australians. Programs may be a means to do that but aren’t an end in themselves.
Government spending shouldn’t target programs. It should target the key areas of education, jobs, health, safe & stable communities, effective governance and preservation of culture and language, with clear and measurable outcomes required. Government shouldn’t fund programs that don’t deliver these outcomes.
If a program doesn’t deliver funding should be withdrawn. Don’t fund health programs that aren’t making people healthier; don’t fund employment programs that can’t demonstrate clients are getting and retaining real jobs; don’t fund business programs that aren’t contributing to the creation of genuine private businesses; don’t fund community programs that aren’t making communities demonstrably safer and more stable.
And Indigenous programs for reducing disadvantage should adopt a mindset that their ultimate goal is to cease to exist, because there’ll be no need for them any more.
If we get rid of wasteful and poorly directed spending, money can be reallocated to initiatives that are proven to actually work. Over time, problems will be solved and costs will reduce. I want to see a day when no money is spent on closing the gap because there is no gap to close.
Nyunggai Warren Mundine is Chair of the Prime Minister’s Indigenous Advisory Council and Executive Chairman of the Australian Indigenous Chamber of Commerce. This article was first published in The Australian on 22 April 2014.