Now the criticisms of the ANZ-National line appear to be:
- Its only a 4 page insert in there weekly report,
- The definition of backroom and frontline is self-serving and wrong,
- The report relies on the belief that all spending on backline staff is waste.
I can understand the Standard’s irritation at some of the headlines that have been taken from the piece – but nonetheless I feel that their criticisms of the actual discussion that ANZ provides are off the mark, here’s why:
It’s too short
I get the feeling that the insert was merely a summary of work that ANZ-National has been doing for a long time – but currently are not willing to release (as they don’t want to alienate people). As a result, I don’t see this as a fair criticism of the quality of their work.
Conversely you could say that important elements are missing because they had to shrink their work down to 4 pages – however, reading through the piece I felt that there underlying point they are trying to prove is will illustrated, namely that:
more attention needs to be paid to where money is ending up.
The report is asking Treasury to increase the transparency associated with government spending – an issue I heartily agree with, but doubt any government would be willing to implement.
The definition of backroom and frontline staff is inappropriate and they believe that backroom staff are a waste!
In a standard economics sense the definition is perfect. Frontline staff are the ones that face the customers and “directly” create value. Backroom staff only increase value indirectly by increasing the marginal product of frontline staff – this is a standard way of viewing firm or government department structures.
I do think they should have been a bit more careful when discussing backroom staff – they did make it sound a little like that type of worker does nothing. However, there analysis does treat backroom staff appropriately.
On top of this they assume that the marginal product of backroom staff diminishes a lot more quickly than that of frontline staff – a relatively fair assumption when you think of other similar types of organisations (eg department stores). Fundamentally this implies that a firm, or government department, does not need to increase supervising/backroom staff as quickly as it does frontline staff when increasing services.
Now given these assumptions they discuss where new funds are relatively being directed. They have found there has been a bias towards backroom staff over the past few years. You can defend this by saying that the public service was previously understaffed – but it doesn’t make the measure inappropriate.
I feel that the main purpose of the ANZ-National statement was to say “hey, Treasury, give us some more transparency surrounding fiscal spending”. In this sense I agree.
If Treasury could do this, and provide measures of how the current and forecast fiscal stimulus might impact on the general economy (namely through inflation), the public would have a much easier time trying to figure out whether the government of the moment is really focusing on the economic goals that it is discussing.