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Shadow minister comments on recent criticisms of Canberra and public service responses to the recession

MATTHEW ABRAHAM: An hour ago, the Coalition spokesman on Administrative Services and the ACT, Senator Warwick Parer, over a breakfast meeting at the Convention Centre, posed a very basic question about Canberra - sink or swim? In recent months, there's been a widespread perception here that the rest of Australia is holding our heads underwater - it's a drowning - and from what I've been told on this program, it has been the Coalition which has been actively involved in that campaign, all of which makes Senator Parer's question all the more difficult. Senator Parer joins me now. Good morning.

WARWICK PARER: Good morning, Matt.

MATTHEW ABRAHAM: Senator Parer, can I put it to you that it's been the Opposition at the forefront of attacks on Canberra.

WARWICK PARER: No. Well, that's not correct at all, Matt. There has been some remarks made, you know, in respect of the remoteness of Canberra, but I think the person who's probably made the most telling statements about it has been, in fact, John Button, who indicated that, you know, only a couple of weeks ago that he thought that Canberra bureaucrats were out of touch and that they'd failed to read the economic signs. I think they're the exact words of John Button.

But I think what we're looking at is that we have the worst recession in Australia in 60 years, and there's been a tendency in the community when that happens to turn around and say: Well, it's got to be those bureaucrats in Canberra. And I have a view that that's just a clever flick-pass by the Government to abrogate its own responsibilities, and you know, I think one of the comments I made this morning was that to take that view is equivalent to saying: Let's blame the employees of Qintex for Christopher Skase's mistakes.

MATTHEW ABRAHAM: And yet we've had Peter Reith talking about chopping programs off at the knees and John Hewson talking about relocating - well, John Hewson talking about relocating senior bureaucrats to Melbourne and Sydney for a bit of a dose of realism.

WARWICK PARER: Yes. I know that remark was made simply so, you know, that Canberra could recognise the fact that while the rest of Australia is in recession, Canberra certainly hasn't suffered from it. There are a number of reasons for that, of course, in that we have a population here that really is geared around the public sector where, because of their very qualifications and nature, some of them - well, they're all fairly highly paid - a lot of them are highly paid people compared to the rest of Australia, so there's a range of those sorts of reasons. But I think that, really, what they were saying was, what John Hewson was actually saying was that where we have a - and, in fact, I've said it - is that what we have to look at is whether we need a lot of the structures we've got here if we're to get the country back on track.

MATTHEW ABRAHAM: Yes. One of the things about - we keep talking about the recession. For starters, Canberra is getting a delayed recession, a delayed effective recession, and that's showing in our unemployment figures, but you could also argue that while Canberra has a high average income, we don't have the excesses, the snouts in the trough excesses we've seen in cities such as Sydney and that Canberra didn't cash in on the boom, the property boom, which created many of our economic problems.

WARWICK PARER: Well, there's no doubt that Canberra hasn't suffered the reductions in housing prices that has occurred in the rest of Australia. In fact, one character keeps sending me pieces of paper about this, month in, month out, to show that while we've had reductions in housing prices in places like Sydney, Melbourne and - I think Brisbane's actually gone up 5 per cent but it's a little different to some of the other capital cities, but in fact, Canberra's gone up something over 20 per cent.

MATTHEW ABRAHAM: Yes, but I mean, Sydney - you would expect Sydney prices to come down because they're bizarre, they're not in touch with the real world.

WARWICK PARER: Well, they certainly overshot because of demand, there's no doubt about that.

MATTHEW ABRAHAM: Anyway, I suppose we can go round and round and round.

WARWICK PARER: We can, indeed.

MATTHEW ABRAHAM: One of the interesting things that I found in your speech is, really, the way you detail what would be planned for Canberra under Fightback, and in particular, the contracting out of work or I suppose the privatisation of departments. Can you tell us about that?

WARWICK PARER: Yes, I can. Well, there's only one reason that you would go that route, is if you can save the taxpayers' money. If you can't save the money, forget it, because that would be just ideological nonsense, but we've identified a lot of areas where we can do that. And I think this brings in the next point, is that according to the discussions that I've had with a lot of people in the business sector within the ACT, they claim - and I think, quite rightly - that Canberra has a lot of unused infrastructure and it's in a prime position to take advantage of that. Now, whether they do or not is entirely up to them but, you know, this would probably be - and again, this would be a great plus for Canberra and I think it's very exciting for the Canberra private sector because it would then shift, to some degree, the ratio of public sector to private sector within the ACT.

MATTHEW ABRAHAM: And you'll work to ensure that those government business units which are privatised are taken over and run by the people within the units?

WARWICK PARER: That's the ideal thing to do. That would be the perfect situation as far as I'm concerned.

MATTHEW ABRAHAM: How would that save money?

WARWICK PARER: Well, if it occurs that way - see, why they've got problems at the moment is that you've got - when you have commercial operations run by governments, they don't have the same emphasis put on them on the bottom line - in other words, to make a profit - because they can always go back to the public purse if things go crook. And of course, that in itself, takes away the incentive to introduce efficiency.

MATTHEW ABRAHAM: Now, you're saying that one of the problems of the public sector and the reason it can't run enterprises as efficiently as the private sector are the work practices, the fact that public sector employment tends to be geared to a peak load rather than a base load, security of employment, and the final one is that the public sector isn't going to go broke.

WARWICK PARER: Well, it's the final one, I think, that counts. You know, having been in the private sector all my life, that becomes the predominant thing in your mind, to make sure that you progress and also that you don't go broke and put a lot of employees out of work. Now, under the public sector - see there's nothing wrong, let me tell you, with the people who work in the public sector, in the main. They're good operators or the ones I've struck are good operators, anyway, but there's no incentive there for them to actually make sure that they run efficiently because they know that at the end of the day, if they run short of money they can go back to the Minister for Finance and get it from the taxpayer.

MATTHEW ABRAHAM: Well, which Minister of Finance is this one? Senator Peter Walsh never had an open cheque book. Most public service departments I know are terrified of running over their budgets.

WARWICK PARER: Well, if you look at it, in every commercial operation within the Government there's a thing called community service obligation, and that's the lead-in to go back to the Budget, and I would presume - and I say this - I say I would presume that most heads of departments within commercial operations would try and maximise the amount of community service obligation that comes off the Budget.

MATTHEW ABRAHAM: All right. You've also looked at the efficiencies and on your costings, on the percentages, you've taken a conservative stance in Fightback - the figure of 15 per cent for the commercial units of DAS, compared to what?

WARWICK PARER: Well, all the studies done have indicated - and again, I'm only talking specifically about those areas that would lend themselves to privatisation - have indicated that if you go that route and contract out, that the savings to the taxpayer are the order of 30 to 35 per cent. Now, these are done by people like Professor Domberger in Sydney and people like Rimmer who is now in the Industries Commission, and we have simply taken the view of 15 per cent because we think it's a conservative approach to determine the savings.

MATTHEW ABRAHAM: Okay. Compared to what, their projections of around 30 per cent or up to 35 per cent?

WARWICK PARER: Yes. They vary and it depends on the particular unit.

MATTHEW ABRAHAM: Just finally, this whole question of contracting out work or privatising departments - there is a danger, is there not, that senior bureaucrats who have exclusive knowledge of the information needed to do the job will leave, get their retirement package or their redundancy package and then come back as consultants and make a bundle, and effectively use that knowledge exclusively?

WARWICK PARER: I have no objection to them doing that if, in the process, there's a massive saving to the taxpayer.

MATTHEW ABRAHAM: But why would there be a massive saving if (a) you've got to pay them out - which is a net cost to budget - and then you've got to pay them in at a rate higher than they were earning?

WARWICK PARER: .... put this into perspective. I think you said they'd leave and then come back. If they leave, of course, they don't necessarily get a pay-out, but the - I think the thing is in my discussions with a lot of them, they are very enthusiastic about this because it frees them up. You see, what's not understood, it's the same as applied in the private sector. If you free a group of people up to do work which they're very good at so it's not just limited to the public sector itself, it gives them an incredibly good market that hasn't been there before.

MATTHEW ABRAHAM: Yes. You do concede, though, that there's quite a high cost on shedding public servants - it costs you money to get rid of a public servant.

WARWICK PARER: Well, there's a difference between shedding and there's a difference between people deciding to do it themselves, but the - the Fightback has made provision for that anyway, for those people. You know, if they ....

MATTHEW ABRAHAM: Yes. There has been some concern expressed that you've under-provided for the cost of paying ....

WARWICK PARER: Yes, well that's nonsense. That was nonsense. In fact, Minister Bolkus said that. He picked the figure of 200 million out where, in fact, 500 million was provided for.

MATTHEW ABRAHAM: Is 500 million enough, when you're talking what - 5,000 jobs in Canberra alone?

WARWICK PARER: Oh, you're not talking 5,000 jobs. See this is ....

MATTHEW ABRAHAM: Well, how many jobs are we talking?

WARWICK PARER: You're talking - already, let me tell you, in my own area you're talking about - the Government itself has gone down that route, to some extent. They themselves shed something like two or three thousand people, and that was done without too many hiccups. Now, the level of employment, there, depends on the level necessary to maintain an operation which, in fact, will have an expanded market, so I don't see this great fall-out. Sure, there's going to be a movement across from public to private, but those same people with ability, will have very viable operations in which to expand their markets.

MATTHEW ABRAHAM: Senator Parer, it must have been a stimulating breakfast. It may have given some people indigestion, but thank you for talking to me, this morning.

WARWICK PARER: Thank you, Matt.