Filthy lucre

There has been such a blurring of the line on government largesse relating to flood emergency relief that I find it irresistible to counter what appears to be a widespread misconception: no government has its own money, nor can any government create its own wealth by just printing money and passing it around like Monopoly scrip without dire economic consequences.

When people talk about government funding, they really mean taxpayer funding. Every cent any Australian government collects and dispenses is collected in the first place from private citizens and businesses through taxes.

In recent discussions I’ve had with otherwise articulate and intelligent people about the flood crisis and how to fix it has left me astonished at the appalling ignorance about how government is funded. One public sector manager refused to acknowledge altogether that her salary is paid for by taxes. When challenged how else this could happen her only response was ‘government money’. I was powerless to explain that government money is money extracted from the pockets of employees (including hers) and businesses in the form of taxes.

My concern is that if there is such poor understanding about where government funds originate, there might be entirely unrealistic expectations about rebuilding the wreckage of the floods. We might face really infantile, Hansonite solutions like: ‘let’s just print more money’, or ‘the government should just re-build all houses affected’, or ‘just get the banks to lend at lower rates’. The list goes on.

It’s really rather simple. Every government job and budget, from the Prime Minister to the Queensland police, is funded entirely from money extracted in taxes from someone being paid by the private sector to provide goods or services. The entire public sector is funded by private sector employees and businesses, and does not, in itself, add productive capacity to the economy, though we obviously value the services it provides (roads, schools, health, leadership, law and order, etc), and spending by public sector employees is an important stimulus to the national economy overall.

Once that concept is understood, and notwithstanding the political and social equity arguments about public sector funding, it should become pretty clear that any massive financial commitment to flood reconstruction must come directly from the pockets of private citizens in the form of higher taxes, charges, and prices, and/or by foregoing some services like health, education, law and order, etc, because funding for these is being diverted into reconstruction efforts.

Such costs are in addition to any private donations and assistance being provided separate from government action.

The reason this topic is of such interest to me is that all my comments about political responses to the flood disaster have been predicated on the fundamental understanding that the government and all its staff, from the Prime Minister to the lowliest public servant, are paid to provide assistance in such circumstances, and should be publicly scrutinised for their competence and actual achievements rather than rhetoric and promises. In other words, if you are the Premier of Queensland, you’d better be able to do more than hold press conferences (at which you blubber about toughness) to address the disaster.

It is, not entirely coincidental that the questions I’m raising here are the very ones being avoided in the euphemistic news media discussions of the Prime Minister being unable to answer how the ‘Federal Government’ will pay for reconstruction. It seems even our journalists are flumoxxed by the simple economics of how ‘government’ funding works.

A question I have posed to friends and colleagues in talking about the crisis has been that we hear of the Premier’s Flood Relief Appeal raising millions of dollars, but apart from the statement: ‘The Premier has announced the establishment of a Distribution Committee, a committee including representatives from the Australian Red Cross, to manage the disbursement of the donated funds’ we have little or no idea of how that money is being spent. In fact, we, the public, have virtually no idea at all about what the Queensland public sector’s response has been to the crisis.

None of this is to say that our emergency services personnel didn’t do an outstanding job. But it is to say that I get the distinct impression their leadership let them down, and let the public down, in not being better informed, better prepared, and better led.

That last issue has not gone away. It is admirable of the Premier to appoint an army officer to the immediate recovery effort because the ADF has proven to be very good at precisely the kind of logistics needed to achieve that outcome. But the army is not a longer-term solution.

It was for that reason that I made the observations on 16 January about the necessity of publicly accountable project managers for each of the towns, and, perhaps, each of the industries, trashed by the floods. It is really the only response that I think is flexible, open, and agile enough to muster the necessary expertise (as opposed to common public sector perceptions that university boffins are the only experts) and to yield the kindof rapid results we all hope for.

The reality, from my perspective, is that the public sector is so rule-bound, mired in departmental demarcations, and removed from public accountability, that its time-frames are always months where hours and days are required. Now is not the time to argue the whys and wherefores, just to ensure that we get results as quickly and efficiently as is possible — and it is possible because we have the professionals who can make it happen, if only we had leaders courageous enough to reach out to them.

That’s what I’d have started doing a few days ago.

My line of argument leads neatly into another area of discussion in which friends and colleagues have taken me to task. Many have suggested that I have been unduly harsh in my assessment of leadership failures. Curiously the criticism has come predominantly from the white collar crowd, while the blue collar guys were on-side with me about the chaos in organising masses of volunteers, prioritising and targeting specific areas for emergency restoration (ie, roads to get volunteers to other destinations, food supplies to those who needed them, not those given over to undisciplined and irresponsible panic buying, restoration of productive capacity in regional Queensland, etc).

My argument with my white collar friends and colleagues has been that it’s all very well to shake our heads at the appalling tragedies unfolding, but it’s not OK for our leaders to be doing that, or to be using the disaster for political ends (shades of Bligh’s and Rudd’s media stunts come to mind). We are entitled to expect our leaders to be grappling with the harsh realities of triage and unpopular but essential choices. Making possibly unpopular choices because they are the right ones is what leadership is about. That principle is most especially important in disaster scenarios.

To repeat what I’ve said already, with the entire Liberal National Party opposition missing in action for the first half of January, we effectively have no one watching what the State Government is doing, or promoting efficiency and better practices if these are absent in specific areas of emergency relief activities.

In short, the people of Queensland have not been well served by their leaders thus far. I don’t really care if this is seen as an unkind assessment, because it is the only one I can make given the absence of any meaningful information to the contrary. If I were talking about a town council in the outback, my comments could be justifiably labelled as unkind. But I’m talking about the State (and Federal) governments. Sadly, I expect that most of my present critics (in my small discussion group) will be agreeing with me in the weeks to come, when the opportunity cost of not having acted rationally and competently earlier begins to mount and translate into real dollar costs to those people.