Figures from the Australian Bureau of Statistics released last week show that Australia is now paying nearly $250 billion a year on 2.6 million public sector workers

for an average salary of more than $95,000 a year each. That would be nice. Now, it must be said that most of that employment is at the state government level. But what’s most concerning is not the amount, although that is very concerning. It’s the rate of growth 7.6%, 6% last year very much led by increases in the size of the federal government. But that’s still only part of the story because a year ago we were having a very similar conversation. That time it was about an 8.9% increase in the number of public servants during 2023–24, led once again by increases in the federal government, specifically who, for example, added 38.8% more bureaucrats to the National Disability Insurance Agency in that one year alone.

Now, this is happening at a time when the official inflation figures are supposedly hovering between about 2.5 and 3% and a bit, meaning that overall government employment is growing at 2 to 3 times the rate of inflation, and federal government employment is increasing up to 10 times faster than inflation, which further exacerbates our already very serious cost of government crisis. Last year, the Albanese government made a big song and dance about how they were going to reduce the number of government contractors. Senator Katy Gallagher claimed that it would lead to a $1 billion saving, and KPMG were one of a number of big budget contractors affected. Thing is, the government didn’t stop the spending. They just shuffled it around, hiring more bureaucrats and doubling the size of the government’s own internal consulting agency. Go figure.

The government is so out of control that it needs its own consulting firm to tell all the other bits of government how to government. I guess, the reality of the Albanese government cuts to consulting was a multi-billion dollar budget blowout, with hiring increasing so fast that they failed to put aside the money required to cover the salaries, blowing a $7.4 billion black hole in the budget. So much for saving $1 billion, eh? And I can’t emphasize just how much of a failure this was. When they announced this reduction in consulting, they also predicted that the federal government salary bill would remain below $30 billion until at least 2028. Less than 18 months later, it’s at $40 billion already, and the growth shows no sign of stopping.

The government is a parasite. It survives by sucking the lifeblood out of the private sector, the real economy.

And like all parasites, if it sucks too much blood, it kills its host. Now, there are people that argue that the government taxing and spending is the same thing as the private sector earning and spending. So, what’s the fuss all about? But that’s a lie. And in fact, every dollar that the government spends costs us, the private sector, three times over. And I’m going to make the case that the government’s salary bill of $250 billion is actually costing us $3.4 trillion every year in productivity and wealth from our private sector economy. And that’s just the cost of the government’s salaries. That doesn’t factor in the rest of the government’s spending. Overall, total government spending in Australia is somewhere up over 27% of our gross domestic product.

And if I’m right about my three times multiplier, and I will explain it later in this video for you to decide for yourself, but if I’m right, then that means that the government parasite is already sucking nearly 80% of our productivity in this country. And honestly, ask yourself, wouldn’t that explain a lot if that were true? Because on paper, it looks like it should be easy to prosper in Australia, but damn, it is not easy at all. Why not? Well, it’s because we’re trying to thrive, or indeed some of us are just trying to survive in a country where we have a parasite that is sucking three out of every $4 worth of productivity right out of the private sector. Consult your gut ’cause you know that that’s true.

I’ll explain why it’s true in just a moment. But first, my name’s Topher Field. This is the Topher project, and I help busy people like you to make sense of the nonsense and to really understand the world around you. So, if you appreciate what I’m doing here at the Topher project, then please support my work by buying me a coffee via the button at topherfield.net. And if you like my no-nonsense videos, then you will love my no-nonsense books, which are all about government, power, human rights, and the role of civil disobedience in a modern society. You’ll find both my books, plus my DVD documentary Battleground Melbourne, and my t-shirts and hoodies, including quite a few designs, which are about to be discontinued at the end of November. So, make sure you head over and grab what you like now before we discontinue five of our designs to make way for new ones later in the year. You’ll find my books, my DVDs, and the t-shirts and hoodies at goodpeoplebreakbadlaws.com. And everything you buy helps me to keep the Topher project going so, I can keep breaking down issues like the size and spending of government and the real-world impact that it has on us all.

In order to really understand just how devastating government spending is, there are three things we need to cover. The first is the fact that GDP is actually kind of irrelevant when it comes to government spending. What matters is the value that is provided in return for any money that is spent. The second thing is a thing called the Topher delta. Well, I’m naming it that because as far as I’m aware, no one else is looking at this exact metric. And in my opinion, this is the number one most revealing metric to understand the effect of government on real-world cost of living pressures as they are experienced at the ground level. And finally, I need to explain that three times multiplier to calculate the real cost of government salaries on the economy. That’s a lot to cover in just a few minutes. So, let’s get to it.

Firstly, GDP or gross domestic product is how economists calculate the growth or decline in the size of the economy. But by itself, it’s really only part of the story. What matters in terms of our quality of life isn’t the money changing hands. What matters is the value that we get in return for that money. We could sit there handing a $50 note backwards and forwards between us all day long. And by the end of the month, we would have a GDP in the millions of dollars. And yet, we would both have starved to death. Now, of course, in the real world, people don’t spend money unless they’re getting some value in return, which is why the GDP is somewhat useful to a degree, and it’s kind of the best one we’ve got. So, eh, but it’s not the be-all and end-all, and it can be used and abused to hide the damage done by government spending.

But just because money is changing hands, well, that doesn’t mean that something valuable is being done with that money. But the GDP, well, it views all spending as exactly the same because government spending money, well, it’s not the same as you or I spending money, simply because governments don’t respond to price incentives the way that you and I do. They don’t care about value. We prioritize what we do with our money based on what’s most important and what’s realistically affordable for us. Whereas government, well, they spend our money based on what’s going to get them re-elected. And that’s a very different value equation.

You’ve probably heard before about the matrix of spending money where people spending their own money on themselves, well, they care about both the price ’cause it’s their money and the product because they have to live with it. On the other hand, if you were spending someone else’s money, let’s say your boss tells you to organize the Christmas party, you care about the product because, well, you’re going to experience that party, but you don’t really care about the price as long as your boss isn’t angry with you. The value is not important in terms of how much it costs. Or in another scenario, when you buy a gift using your money, you don’t really care about the long-term benefit of the gift. You just want to get a good result while you’re there in the room. The gift, the toy, whatever, it can break in a week. Who cares? Because you don’t have to live with it long term, but you 100% care about the price because it’s your money that you’re spending.

And finally, we get to the last category, the category of government, where these bureaucrats and politicians, they are spending money that is not theirs on people that aren’t them.

Politicians and bureaucrats care neither about the price nor about the value, only about the popularity. Thomas Sowell, one of the greatest communicators of our time, said it perfectly when he said, “It is hard to imagine a more stupid or more dangerous way of making decisions than putting those decisions in the hands of people who pay no price for being wrong.” Government bureaucrats and politicians pay no price for being wrong with our money. Every dollar they spend, well, it’s risk-free to them. They pay no price for spending it badly. So, no, government spending is not comparable to private sector spending because it’s going to be wasteful and misallocated pretty much all of the time because they don’t have the same incentives as the rest of us.

Okay, so that’s point one. The GDP doesn’t really matter in this case. Point two, the Topher Delta. And yes, that is just the name I’ve given it because as far as I’m aware, no one else is paying attention to this exact, and I will admit quite specific, metric. The Topher delta is specifically the difference in the real-world purchasing power that an employee or a business actually receives and gets the use of out of their salary or out of the invoice they send to a client. It’s what’s left versus the real purchasing power that the employee or that business costs to their employer or to the person who is paying that invoice.

Now, that’s a bit technical. So, let me give you an example, and I’m going to use the case of an employee. If you got a salary of let’s say $95,000 a year, because that’s what these government employees that we’re talking about, that’s what they’re getting on average. You actually cost your employer closer to $110,000 a year once you add superannuation, payroll tax, work cover, and other employment-related costs. Probably actually a bit more than $110,000 for your $95,000 salary. But you don’t get the real purchasing power of $95,000. In fact, far from it. You have to pay income tax. Then you have to pay GST on almost everything you buy. Not to mention excise on fuel, tobacco, and alcohol. Then there’s all the other things that you are forced to buy whether you like it or not. You have to pay for council rates, licenses, and registrations and fees and charges and stamp duty on your house, which you’re paying for even if you’re renting because the landlord has to recoup that cost. And the list goes on.

Exact numbers are almost impossible to calculate. But it’s safe to say that if you’re being paid $95,000 a year, and wouldn’t that be nice, then you’re left with real-world purchasing power of maybe $45,000 after government has taken all of their slices, big and small, out of your pay packet. More than half of your salary is gone in terms of its real-world purchasing power. That’s the money that’s left that you get to decide what you want, what you value, what you’re going to prioritize. But here’s the kicker. You’re only left with the purchasing power of that $45,000.

But all of the prices of everything that you’re trying to buy with that $45,000, they’re being set so that the businesses can recoup the purchasing power that they have to pay for every one of their employees. Businesses have to fully recoup all of their costs, including all of their employee costs, otherwise they’re going to go out of business. So, the prices that are being set by your employer for all of their customers, but also by every other employer for all of their customers, including you when you’re one of their customers, those prices are not set to recoup the purchasing power of the $45,000 that you’ve been left with as purchasing power out of your salary. Nor are they set to recoup the $95,000 salary that you got on paper. No, they have to recoup the full $110,000 plus that each and every employee has cost their employer once you add in all of the cost of government.

And that’s the delta, the difference between the real world purchasing power that you as an employee are actually left with after all of the costs of government are factored in versus what you cost your employer. And every employer and therefore what all of the prices for all of the businesses that you’re trying to buy from are set to recoup. Now, if I’m right and an employee who costs in total about $110,000 from their employer is only left with about $45,000 in real world purchasing power, then that would make the Topher Delta right now in Australia about 0.4. In other words, thanks to the cost of government, every dollar’s worth of goods and services you try to buy, you’re trying to buy with only 40. So, that’s the second one of the three things we need to know about. That’s the Topher delta, currently about 0.4 in Australia in my opinion.

So, the first part was government spending is always misallocated and it’s not equivalent to private sector spending.

The second part is that you’re trying to pay your cost of living with only about 40% of the purchasing power that the prices you’re trying to pay are set to recoup. And finally, with all of that in mind, let’s finally get to that three times multiplier for all government spending. How does that work? Well, it’s pretty simple. Every dollar spent by government costs us at least $3 because firstly that dollar was taken away from someone who earned it and would have spent it properly with all of the normal incentives that normal people have looking to get value for money in return for their limited resources. So, that dollar, well, it’s no longer going to go where it should have gone. And it’s not going to buy that person, the person who earned it in the first place, the thing, the product, the service that they could and should have in return for it.

But not only is it being taken from the person who has it, so they never get that product or service, it’s now also being denied from the person who would have received it in return for that product or service. So, the first cost is the person who the money was taxed from. The second is the person who now misses out. But the third is the fact that the bureaucrat who is being paid with this money is doing something that isn’t as valuable as if that bureaucrat actually worked in the private sector instead because of what we talked about before that government doesn’t care about the value that it gets for the money that it spends. Private sector employment has to provide value in the eyes of customers or else that job has to go or that business is going to go bankrupt. In government, well, we’re now spending $250 billion on salaries alone in return for what? Do you feel like you’re getting $250 billion worth of customer service in this country? Cuz I sure don’t.

So, the money is gone from the taxpayer, denied to the person who would have received it. Plus, that money is now being used to pay someone to be unproductive when they could have been productive. Now they’re working in an unproductive role. And we’re still not done because much of what the government does is just get in the way of the private sector. So this unproductive government employee, well, he’s not just being unproductive himself, but often times he’s walking around with a checklist or he’s denying people permission or he’s checking compliance and demanding forms and paperwork and the list goes on. And so they’re not only being unproductive themselves, but they are creating an unproductive, time-wasting burden on the private sector.

So, that’s actually a four times multiplier. Every dollar taxed and spent by the government is costing us four times over: the person who the money was taken from, the person who would have received that money in return for goods or services but now won’t, the government employee who is now working unproductively when they could have worked productively, and then the people that, that government employee gets busy getting in the way of. Every dollar taxed and spent by government is costing us four times. But I round that down to just a three times multiplier because every now and again the government accidentally does do something useful. So we can’t say that every dollar that gets churned through the government’s grinding wheel is a complete waste.

Okay. So, if you’re still with me, well done. All you have to do is fully grasp those three points: the fact that not all spending is the same, the Topher delta which measures the cost of government as it is experienced at an individual level, and also the multiplier the fact that every dollar spent by government costs us far more than just that dollar. If you understand those three things then you are now better equipped to make economic policy than the current Muppets that we have in Canberra.

This $250 billion government salaries milestone that we’ve now passed, it’s not just a number.

This is the lifeblood of our country being sucked by merciless parasites that don’t know when or even how to stop. Which is why I say to anyone who will listen that the limit of government power and therefore government spending that limit is defined only by the limit of our obedience. Now, I talk all about that in my books, particularly my very first best-selling book, Good People Break Bad Laws, which is all about government. All about the perverse incentives of politics and why decent people so often turn bad once they get elected, as well as discussing power, human rights, and the role of civil disobedience in limiting the power and overreach of government.

You’ll find both my books, plus my multi-award-winning DVD documentary, Battleground Melbourne, and my t-shirts and hoodies in a range of designs, some of which are about to be discontinued, at goodpeoplebreakbadlaws.com. So, head over there and grab yours today. And in the process, you’ll be helping me to continue doing this what I do right here at the Topher project. And hey, if you’ve already got my books and my merch, then please help me to keep the Topher project going by buying me a coffee via the button at topherfield.net.

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