The Australian has collected together its stories about where our stimulus money is being spent and how well it is being spent. Completely predictably, the answer to the second question is - not very well at all. Projects are being approved without any cost/benefit analysis or with any analysis being kept secret. There may be a rational economic case for a fiber to the home network costing $43 billion (at the very least), but nobody knows because it was a decision made on the spur of the moment that has no business case or cost/benefit analysis attached to it. Recent focus has been on yet another bogus education revolution. Anyone remember the previous one, you know, the promise of a computer for every child in school? Now, apart from the imbecilic naivety that this somehow would represent a "better" education for kids, that "promise" pretty soon became access to a computer for every child in school and then it came out that the promise had never been properly costed to begin with. Left out was the fact that no account had been made of the fact that the states would have to spend huge amounts of additional money to build or upgrade and maintain computer rooms and other pieces of necessary infrastructure, including the wiring and connections needed for the extra computers. Now money is being spent on schools scheduled to be closed and, in one case, a school threatened with closure in Melbourne because of irregularities in its operation. Schools which already have halls, gymnasiums and libraries are being given money for - yes, you guessed it - halls, gymnasiums and libraries. One was told by a state education department to get its old building demolished to make way for a new one that provided no improvement in facilities or capability. If $3 million is provided for a project, then the building is to cost $3 million, even if independent tendering could get it built for much less. Melbourne's Berwick Lodge Primary School "requested a library and six classrooms under its $3 million funding allocation. It was instead offered a gymnasium worth an estimated $2.1m, although the school already had a gym."
Schools are being told that buildings must be of a standard type, whether it is appropriate for their needs or not. Okay. The chief party responsible for this mess is the federal government. While it is state government departments which are at the pointy end of making stupid decisions for bad reasons, the federal government should have known this was the inevitable result of just throwing buckets of money at the states, with the single injunction to them being to spend it quickly. I keep asking this of people who think that governments should do more, but rarely, if ever, get a positive answer - when was the last time you saw a government do something well and efficiently, on budget and on time? Not often, that's for sure. So we return full circle to the utter predictability of vast sums of money being effectively pissed up against a wall. Let's just remind ourselves here, this money is borrowed money. There is no surplus left. That's already been pissed away. It will have to be paid back at some stage. I accept that investment in education is potentially productivity enhancing and thus probably a justifiable reason to go into deficit as it will help us pay off our debts when the economy improves. Same goes for other types of stimulus spending. If it is setting us up for future growth, then that at least provides a justification for the debt. Trouble is, large amounts of this money are really being spent to massage today's employment and economic activity figures, so the government can say that (technically) we haven't slipped into a recession and thus avoid any political heat from the dreaded 'R' word. It's not about building capacity for the future. Second libraries and second school halls will not improve the standard of education received by children and will not therefore produce any extra productivity to help pay of that borrowed money. In ten year's time we'll be looking at schools with lovely buildings they still don't need or which are ill-suited to their needs and be asking ourselves "how the friggen hell did this happen?" How did we manage to waste so much money so quickly for so little long term benefit? One reason behind this I believe is the delusion of governments that they are especially well suited and well situated to understand and then solve complex problems. Socialism as originally defined, that is as the nationalisation of the means of production, distribution and exchange, and not the touchy feely let's be nice to each other and badgers attitude it has degenerated into, was predicated on this arrogant presumption. People thought that they could micro-manage all of the complex interactions of an economy and make it run in a more rational and efficient manner. Except they couldn't. Even with the application of state terror and the employment of slave labour (which is what the gulags supplied) all they could achieve in the end was an economy that more and more resembled a patient with arteriosclerosis. The Chinese communists at one stage adopted the slogan "better socialist poverty than capitalist wealth." Basically it was an admission of failure. (Though our latter day totalitarians in the environmental movement would now recast that as "better sustainable poverty than capitalist wealth.") For those of you in Western Australia, there is a perfect example of the point I'm making. The Office of Shared Services. This was the previous state government's grand scheme whereby all the internal administrative functions of the public service, such as human relations and payroll, purchasing and the like, would be consolidated into one agency in one location. What could possibly go wrong? It'd save millions a year within a year or two. Now, I said to anyone who would listen at the time that this had disaster written all over it and there's plenty that can not only go wrong, but probably go wrong, and I'll just sit back and watch the slow motion train wreck happen. And so it came to pass. Not that the government gave up without a fight! It threw hundreds of millions of dollars of the money it was supposed to be saving into the effort to keep that lead balloon up in the air. The project is now for all intents and purposes a complete failure. The only result is that the state is now hundreds of millions of dollars poorer than it other wise would have been if it had had the cleverness to leave well enough alone. Bureaucracies are not good at doing complex things quickly, if ever. One the methods they use to adapt to this reality is to restrict what they do and to do what they do in set and time honoured fashion, having learnt the lessons of mistakes past. But then they forget. They start to imagine that they can make their schemes work where others had failed. It is one of the reasons why the current buzz words of government, innovation and innovative, fill me with dread. Why not be content with what works? We had a government and a bureaucracy that couldn't even manage the complexity of its own organisation, and yet we now have a federal government and governments around the world who think they can manage the planet's climate, a system that is more complex than even the entire global economy by several orders of magnitude, and get the global temperature to go up or down as if twiddling a knob! This isn't just insane arrogance, it is hubris. And we know where hubris inevitably leads don't we? I don't fear that we will fail so much as that we'll succeed, and then wish we hadn't as the unintended consequences of our meddling with something we didn't even understand properly to begin with become apparent. |
Wednesday, June 17, 2009
StimulusWatch - how your billions are being spent
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