This week we saw a very uncomfortable ACTTAB and government department chucking blame at each other in public at the Vitab inquiry.
However, there is a more deep-seated conflict here _ a clash of culture between private- and public-sector ways of doing things.
ACTTAB provides an example in the much wider debate about what sorts of bodies are best private and what public.
Private companies and firms want to make a buck. To do that they have to get on with it. But to get on with it they have to cut corners. When you cut corners, you take risks. When you take risks you can lose a lot of money, or you can make a lot of money, or fall somewhere between.
This is the symbiosis of private enterprise. There is a trade-off between efficiency, risk and profit.
Public functionaries, on the other hand, want to give service to the public. To give service you have to spend taxpayers’ (or other people’s) money. When you spend other people’s money you have to account for it. When you account fully you have to have no or minimal risk.
This is the nature of public programming. There is no balance or trading off, because there is no profit sliding up and down at the end of the balance sheet. Efficiency and extra effectiveness of public programs should not be obtained by increasing the risk.
Life is usually not quite as simple as that, and things do not slide into two neat categories. None the less, there are endless examples of governments getting themselves into strife over mixing public and private ethoses in their functions. And a further ingredient can make the mixture more volatile: the artificial, statute-based government monopoly.
At the Vitab inquiry the acting head of the ACT Administration, Jeff Townsend, agreed with Professor Peace that “”your line of approach is to move government agencies away from departmental and ministerial control according to whether you want to control their activities or whether they are commercially driven”.
Townsend said: “”I think the basic test is where there are directly taxpayers’ funds involved we become very interested. Where there is a business we do not worry so much because we know that business has to operate according to certain rules or laws.”
In the context of the question and the state of ACT agencies, that reasoning is well-founded. But as a ideal type of administration it is too embracing and illogical. Why does a government want anything at all to do with something which is set up as a business and operates under normal company law? Conversely, if it does want something to do with that function, why does it permit it to be carried out by a company or other independent body over which it has legal ownership but exercises little or no direct control.
It seems the government is trying to get it both ways: it wants extra efficiency without extra risk and extra profit while retaining full accountability. When will governments learn life is not like that?
In the case of a TAB, you can hardly give it a charter of going out to make a buck and then whinge when something goes wrong.
In the case of ACTTAB there is another element. It is a government-created monopoly. It is a crime to compete with it (as an SP bookie for example). What does this mean?
Townsend said the test was whether taxpayers’ funds were involved. Well, if you create an artificial monopoly, you are creating an asset out of general community wealth. A monopoly can charge more because it has no competition. Those extra charges are in effect taxpayers’ money.
The blue-singleted, tattooed yobs who get a poorer return for their betting dollar are in effect being taxed.
But governments are not being up front about it. They milk off more than $1 billion a year from TAB betting.
The Vitab inquiry has revealed the square pegs in round holes.
Townsend: “”. . . it was worth a few hundred thousand dollars a year to the TAB and if we could get that money for a low outlay, it would be worth doing. Our whole government approach is to do business that way because of the way we have been treated by the Federal Government in terms of our funding.”
And later: “”. . . the TAB while doing its own business does it according to its own charter in law, but where it needs a help to get through the government maze, so to speak, it comes to us to help us cut through it . . .”
So we have a government out for a dollar, and a business enterprise enmeshed in a maze of bureaucratic checking procedures.
If ACTTAB had been running a government program (not a business) and the Minister (not the chief executive) was to sign a contract with a company to provide services, the Department would have checked and double checked. It would not have been as efficient or a quick, but there would have been no risk to taxpayers’ money.
On the other hand, if ACTTAB had been a real business spending its own money, then its loss would have been its own and the wrath felt in the sharemarket, not in the Assembly and ballot box.
Instead we have a silly hybrid, which de-facto uses taxpayers’ money and de-jure makes a profit. Small wonder they were chucking mud at each other during the week.
If Wayne Berry had fully privatised ACTAB and ended its monopoly, rather than doing the opposite by bringing it even closer to the public sector, the whole episode would have rated a few paragraphs on the finance pages.
Horses for courses.