Join the new world

I had to put to me by Patti11 last night on IRC several interesting points in support of GFCs, in response to my article: The mirage of Weapons for Work.

It really only costs the government 3.20 per Q1 weapon, so why does this it matter what the weapon is worth on the free market?

Because the weapon is worth $6AUD hypothetically then this is a transfer of taxpayer wealth to the workers. They are not just working for the $4/day in the hypothetical skill 4 situation, they are also receving in value the market price of each Q1 donated to them.

The worker could sell these Q1s and use the funds to buy Q2s or whatever they desired. The worker is still having this much wealth supplied to them for that work regardless of what it cost the government in their own mind. This is lost earnings - and lost earnings of the government is the same as wasted funds.

The government would be far better off throwing its demand into the aggregate demand of the Q1 market and driving prices down overall as suppliers ramp up production to meet this demand using market based pay rates.

Patti11 suggested it would not be a wage of 6Q1s per day, and this may be a typo. Ok then assuming 5 Q1s per day at a cost of $3.20/Q1 + $4AUD in wages this still repsents a daily wage of $19.20 per day when the current wage for a skill 4 worker is $11AUD/day. So depending on your definition the wage of a skill 4 worker ranges between $40AUD and $19.20AUD. This still represents massive waste on the part of the GFC.

The private GM arangement is more complicated. GFCs are the government buying from the Government, it eliminates the middle man.

No more so than the GFC process. I assume the GFC is controlled by the Minister of Industry and the government either buys the weapons at a nominal price or are gifted them to the Defense orgs for distribution to soldiers. Instead the GM would donate the weapons to the Defense and keep the org stocked at all times up the contracted limit.

By using the private sector, there will be far greater savings in the cost of production, and the government also has the benefit of not having to manage the companies. They know their supply is guaranteed by game contract.

What assurances are there that the Government would get the weapons when they needed them?

As is done in the real world, the Government would only deal with substantial GMs. Known trusted players with large capitalisation and serious ability to supply. GMs signing up to the tender process would be required to lodge a surety of performance, which they would forfeit on default.

Secondly, business will thrive on such outsourcing. It will provide much greater liquidity in the weapons market (or whatever markets they choose to do it in) and stability to GMs who are presently having to downsize production and their workforce due to a recession in the economy as can be seen by the rapid reduction in market prices and wages over the past 2 weeks.

Thirdly, contracts for supply will be split up to limit the risk of failure by any single GM. The government can still run their GFCs on a smaller scale as well if they chose to mitigate the risk further.

Conclusion

The Government is using taxpayer money and it is irresponsible to be overpaying our soldiers so drastically when they are performing a job that could be performed by the private sector far more efficiently and cheaply.

Soldiers are fighting as a service to our country and wages should be a separate issue altogether determined by the market. The current arrangement repesents a gross waste of taxpayer funds simply because the Government has not bothered to build relationships with private suppliers who can deliver weapons at a rockbottom price.

In the end this will make the defense of our borders cheaper and provide the Government with more funds to do other things for the country.

infin
Senator for Queensland