Gary Sturgess, former NSW top bureaucrat and a driving force behind national competition policy, has published a muscular critique of last week’s tax forum in this morning’s Australian:

WE have just had a tax forum largely debating how to raise revenue. Yet the government could save up to 20 per cent of its expenditure by overhauling traditional policy-making and accountability processes in the delivery of public services.

If we think of schools, hospitals and prisons as firms, then the regimes that regulate them amount to the worst red tape imposed on any sector of the economy, resulting in billions of dollars of lost productivity each year.

I totally agree with the sentiment, although the 20% figure is probably too ambitious. The studies I’ve read of the Thatcher reforms in the UK certainly suggest savings in the order of 10-20%, but there is a large part of government expenditure (i.e. pensions, other welfare payments) that couldn’t be cut. Hence a 20% saving is unlikely to be achievable across the whole range of government expenditures. Regardless, even a 5-10% saving in total government expenditure would amount to tens of billions of dollars.

Mr Sturgess’s conclusion is spot on:

Governments need to make more use of contractual models in delivering public services, without necessarily using the private sector. They also must appoint quality people to front-line management and learn to trust them. They must change the risk-reward ratio, identifying and honouring those who succeed, while protecting those who take measured risks and fail. We must encourage innovation in front-line services that is systemic rather than heroic.