It’s not all about cutting expenditure, seek it’s also about better expenditure
A small business person knows there is only a certain amount of cost cutting that can be done before it becomes counter-productive. Too much cost cutting makes for inefficiencies or even adds to stress of the person running the business and also to the stress of any employees. We do know however that there are often better ways of utilising the money we already have to spend.
So a good business operator will regularly review how their precious dollars are spent on various business expenses depending on the type of business we run. This will include communications, sickness travel, accounting support, training and apprenticeship costs, HR support, security, waste disposal and the list goes on.
This federal government (and most governments) have vigorously and aggressively sought to cut expenditure. That is a good thing but eventually cutting reaches a point where services and policies are negatively affected. The government should also look at increasing tax receipts by more efficient on-going expenditure.
Better expenditure can be achieved in several ways. This includes: by better targeting of programs; by changing the way funds are distributed to users; and by changing the key business systems creating potential efficiencies for regulators.
Some examples which are elaborated further below include: vocational education and training; the provision of employment services for the unemployed and disadvantaged; superannuation regulation; workplace relations regulation; targeted expenditure such as the Digital Transformation Office (DTO); infrastructure; and small business administration.
Vocational Education and Training (VET)– it has been well documented that the VET sector is in crisis. Too often training organisations do not provide the right skills to people seeking work (or new careers) and therefore fails industry and the community. The almost $6 billion spent per year in VET can be used more efficiently which will create more effective industry and better work opportunities. This can create more jobs, higher wages and increased tax revenue.
Employment services (government funded)– this sector receives government funding of some $1.3 billion a year and is too often failing the unemployed and employers as the contracted companies focus on profit not effective placement of unemployed. This process should be funded through a grant system where there is certainty over outcomes and allocation of resources to key tasks. The failure of employment services is linked to the problems in the VET sector. Improved employment services will create more jobs, higher wages and increased tax revenue.
Superannuation regulation – the current collection process for superannuation which relies on employers is inefficient and costly to administer. Placing superannuation guarantee in with PAYG payments to the tax office will save employers and superannuation funds billions of dollars in administration costs each year. It will also save the ATO and other regulators hundreds of millions of dollars as they would no longer need to monitor employers for superannuation payments. There is also the benefit that any unclaimed funds (apparently well over $1 billion) would be managed by the ATO rather than being lost in the industry superannuation fund mire.
Work Place Relations (WPR)– there needs to be a less complex WPR system for the 90% of employers – small businesses. We need to develop a small business industrial award written in plain English solely for the small workplaces in Australia. This would be easier for employers and employees to understand and therefore easier to regulate. There would be savings in time and money as well as less conflict. The savings would be for employers, unions and the regulators (the Fair Work Ombudsman and the Fair Work Commission). Indeed we may need less unions as well as less regulators.
The Digital Transformation Office (DTO) – The DTO was set up to foster new efficient ground breaking ways for government to communicate and deal with people. Some of the DTO funds can be re-allocated for developing ecommerce activities. For example, if software enabled eInvoicing was embraced by software providers and users it would save industry some $7 billion a year and save all levels of government some $4 billion a year. Industry is working with governments to set up a mechanism to make this happen sooner rather than later. This process will benefit from broad support from industry and government to realise the savings. High priority engagement from digitisation agencies (like DTO) would help this along.
Small Business Administration – currently a small business operator (96% of businesses in Australia) needs to go to several government agencies for the compliance management and information it needs for administration purposes. This mainly involves ASIC for corporate issues, the Australian Business Register (ABR) for an ABN and business.gov.au for other information. Efficiency and savings can be created by combining these functions, and other small business related functions, into one entity.
Infrastructure projects and privatisation – There was a time that privatisation of government assets was a means to improve competition and market efficiency. Sadly it seems that raising funds for budget purposes is now more often the sole reason to sell a government asset. This needs to change as more strategic privatisation and better management of the process can create improved economic opportunities for business and communities. The same issue exists for infrastructure projects. The expenditure of billions of infrastructure dollars should be backed up by a very small expenditure on local economic development (say $20 million nationally) to enhance new business opportunities for affected small economies. Laissez-faire economists tend to believe that we should all do nothing at all or as little as possible, they believe their mantra that the “market will decide” -showing that they are as out of touch as always. A market will indeed decide when given the information necessary for people to be motivated and investment decisions to be made.
Finally, laissez-faire economists should not be allowed in the same building as privatisation and infra