08/05/2007 - 22:00

Budget dreaming

08/05/2007 - 22:00


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I’m not a real fan of budget week.

I’m not a real fan of budget week.

Not only do I dislike the politics that surrounds what should be a practical and very important task, I also find it a reminder that business has to go through the same process.

That becomes particularly poignant for me, feeling the need to berate governments for rising recurrent spending when, as a cost side of an enterprise, I am usually asking for the same. Nonetheless, I thought I’d have a shot at the budget we ought to have, even though I know we’re not going to get it.

Firstly, we are in a growth state that demands rising services and has growing revenue. So I would increase most things to account for that. New communities and a rising population need it. But I would also recognise that some things have more value than others, and some things can be cut back.

Education is a must because, arguably, it will have the greatest impact in addressing our future problems. Theoretically, a better-educated population will have better health and less crime, which will help curtail the cost of our medical system, police and the courts.

Of course, that’s very simplistic (and doesn’t necessarily just mean state highs schools), but it’s still a seed that needs to be planted now.

Also, these better-educated people still need jobs. The French have great education but their economy is so poorly managed that the young people leave school without a job to go to.

Right now, that is not a problem in Western Australia, but the current positive state of affairs is unlikely to last forever. Many of the jobs soaking up the unemployed are construction-based, and that’s not a realistic long-term option.

Employment in industry is heavily weighted towards the short construction part of the process, followed by a long tail of small but durable employment.

So the emphasis right now ought to be on building things and getting them done. That means a budget which expends energy on medium term projects such as assisting exploration and mining applications, fast-tracking any reasonable construction project (not just the giant ones), helping companies find short-term labour (even from offshore) and funding bureaucracy where it is focused on short-term projects to improve our community. It’s about maintaining momentum rather than just letting the boom go bust.

I know some of this is happening, but not enough. Where’s the foreshore development, where are the radical developments to improve indigenous development?

This kind of funding should have a use-by date put to it. A deadline should be put in place that makes sure everyone understands that in one, three or five years the job will be done and the bureaucracy remaining should not be staggeringly bigger than what was there before.

When we build a road or railway, we have a much bigger team to construct it than is ever needed to run it. In that case, we turn to the private sector to deliver outcomes, we don’t expand the government machine.

The same ought to be for education, health or any other bureaucracy.

A case in point is the over-stretched vehicle licensing operation. A long overdue decision has been made to outsource some of the simple vehicle checking processes to private business.

Of course, that is expected to be more than a temporary solution. Why the government needs to have an army of vehicle inspectors beats me. Isn’t that what mechanics do?

While we are on the budget, now is a chance to stimulate business growth to ensure there are plenty of employers out there ready to take the risk of employing these well-educated people we are developing.

Australia is getting smaller and our state needs to be more competitive when it comes to issues like payroll tax. Now is a chance to slash a tax that is imposed for employing people.

Some land and property taxes, especially the former, ought to be adjusted and made more equitable, but now is not a time to overdo change in this area. I have argued this before, but while our obsession with property might make it election-sensitive, it is a major drain on far more useful forms of capital.

Let’s encourage people to use their capital to go into business or fund new and exciting projects, not passively grow a property portfolio so they can retire and play golf on the proceeds. That may be many people’s ambition, but it’s of little use to the state.

Of course, we need property, cheaper property, to encourage people to come here, so perhaps some of that spending ought to be on ensuring new land is made available more quickly for housing, or that development applications of any kind move more rapidly through the system. Again, this is an urgent and immediate need, so why not fund it for a determined period, one that ends when the developers pack up and go golfing (on their own courses, of course)?

I know all this is a challenge. People aren’t just available when you need them and they may cost more if their future is uncertain.

But many industries operate like this, so why not government?

Why not find the people we need elsewhere and bring them here for a short time, on the understanding that most of them will return home in the medium term, richer for the experience, as will our state?

To me, this is how businesses operate. They fund immediate issues and seek solutions to issues without, where possible, simply adding more people, especially on a permanent basis.

Business likes to make sure its position is certain before it adds to its long-term workforce. Business also looks to strengthen its inherent advantages and keep other elements more streamlined and efficient.

Unfortunately, I am pretty sure this week’s budget will look nothing like the one we’d really like to see.


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