So far no one has worried too much about the logistical difficulties of getting $42b of stimulation out the door. They are significant and will bear directly on whether the package can actually do what it is intended to do.
Spending small amounts of money is relatively easy. Spending lots of money quickly, is hard. Very hard. One of the reasons for the Howard Government’s large surpluses was that it kept getting to the end of each financial year and finding it had a lot more money left over than it expected. The fault was only partly because Treasury could never accurately anticipate just how rapidly company tax receipts were growing.
One of the other reasons was that the Australian Public Service couldn’t roll out new programs fast enough. It didn’t have enough bureaucrats and the sheer volume of money going into dodgy regional programs and community grants was too great to direct unless all pretence of proper administration was abandoned.
That was all within one level of government. This mostly involves the states.
COAG met yesterday to work out how to spend nearly $28b between now and July 2011. Just to make things more difficult, the spending is targeted at housing and school construction, a sector dominated by smaller operators, who will be working on tens of thousands of small projects, ranging from building new school halls to constructing new housing and installing insulation. There are some options for efficiencies. Housing projects will be taken on by large developers, as usual. There is talk of trying to bundle a number of small projects together in specific areas so they can be managed by a single contractor who will sub-contract the work. There will, as Rudd cheerfully admitted yesterday, be implementation problems.
COAG did address one issue which for generations has driven Commonwealth bureaucrats and ministers to distraction — the capacity of states to cost-shift to the Commonwealth by reducing their expenditure in an area when the Commonwealth increases it. Instead, the Commonwealth Treasury will have access to all state expenditure forecasts for coming years to check that there has been no reduction by the states in housing educational infrastructure spending. That sounds good, except the Greens this morning discovered potential problems with state governments selling public housing. Despite the good intentions professed yesterday by Premiers, the states need to be watched closely. They’ll try anything.
COAG also agreed a rollout timetable which is, to put it mildly, heroic. The primary schools funding will be divided into three rounds. The first involve projects starting by June, the second by July-August and the third by December. Other components require projects to start within eight weeks. The housing package will be rolled out with comparative sloth. Allocations won’t be made until April and August.
All of this will involve state government bureaucracies. And, perhaps more scary, state government ministers as well.
So step forward Mike Mrdak, the new Commonwealth Coordinator-General. The Coordinator-General will oversee the entire program. He’ll liaise with new Coordinator-Generals in each state on ensuring the expenditure is rolled out in the timetable COAG has agreed.
Mrdak is a Deputy Secretary in Prime Minister and Cabinet. He moved there from Infrastructure last year as part of Terry Moran’s overhaul of the PM&C leadership team. He is one of the best of next generation of senior public servants and an outstanding choice for the role. Unfortunately it might be make or break for Mrdak, but he’ll assuredly move on to greater things if he succeeds. Those focussed on Rudd’s retention of Howard-era secretaries like Halton and L’Estrange are missing the ongoing transformation of the senior APS under Moran’s leadership.
Unlike the rest of us, Queensland readers might be familiar with the idea of a Coordinator-General, a position established in 1938 to expedite and better coordinate Depression-era public works. Rudd’s Queensland background is once again shaping his approach to government. The Queensland role combines a strategic approach to development with a Bjelke-esque capacity to override pesky regulatory requirements like EISs. It’s also similar to various “czar” roles in US bailout packages.
Mrdak’s role isn’t quite the Queensland position, though. It hasn’t been included in the bills for the package, and PM&C confirmed to the Senate committee this morning that it wouldn’t be a statutory position. Mrdak won’t have specific powers — merely the responsibility for overseeing the biggest and fastest spending program in Australian history.