Is this writer really saying that education and hospitals don't produce anything?

Education, healthcare and other publicly-funded functions are consumers of resources, not producers of them. They exist to enable higher outputs in the sectors of the economy that create wealth. If the wealth-creating sectors are growing more slowly than the wealth-consuming ones then there may be a problem coming up.

Part of the expansion in these sectors is undoubtedly down to the increased demands on health and social support services created by an aging population, but that's only part of it. The title of the piece is very good: a great deal of this increase is due to services such as childcare and other social support services for single parent families and for two-income families. A large part of the education expenditure is similarly paying for mature women to become qualified to do those support jobs, such as social work and childcare, which they are very likely to do only part-time, reducing the effectiveness of the public investment in their education. In addition, the vast growth in the pay on offer in those sectors has exacerbated the problem.

The aging population is an unchangeable demographic phenomenon that has been foreseeable for many years and has been the subject of a great deal of planning. The vast growth in people "hanging out each others' washing" is a consequence of ill-considered social engineering designed to increase the size of the labour pool without a concomitant increase in population, partly in response to that change in age profile and partly for other, political reasons.

The article didn't mention it, but over half of Australian GDP is derived from personal consumption expenditure and only a small fraction is from expenditure on business investment of various kinds. Around 25% of that personal consumption is funded from tax redistribution. Over 50% of employed persons pay no net tax, so that small slice of business investment has to do an awful lot of work.

Reading a recent report where there is one "manager" for every 2.5 workers, and about 20% of public servants are classed as "executives" I think that there is a huge scope to purge the huge pool of non productive paper shufflers.

Part of the problem is, I believe, incompetence and endless repetition, to get it right, eventually?
We also are still afflicted by endless duplication, paper work in triplicate, and the endless and entirely unnecessary collection and collation of information.
Just to give some centralizing bean counters, a sense of their own self importance, and or, somehow justify inordinately high salaries/and senior executive job titles.
We know who's incompetent, just by the number of super competent assistants he/she needs?
And the stuff-ups he/she presides over, when they, who always know best, ignore more competent advice?
The Queensland health wages debacle, a case in point!?
These people are your typical corporate psychos, foul-mouthed bullies, claiming all the kudos and shifting all the blame!
If only we could clean out senior public servants with each election!
Private sector CEO's have limited service contracts, which allows the corporate cowboys to be moved on, preferably before they do too much permanent harm.
We really do need to decide who does what and end the duplication and the blame shifting it allows!
If public health/education funds are basically collected and redistributed by the fed, then perhaps a direct from the fed funding model, would reduce some of the unnecessary and costly double dip administration.
State govts, before they provide so much as a single service, already consume some 70 billions PA, as the cost to us, of their existence!
In not too distant memory, much of our public service provision, health, education, utilities, was provided by unpaid voluntary regional boards.
Regional councils took care of water/electricity reticulation, when council members were still unpaid and mayoral salaries were in real terms, just a third of what they are today.
Council sole responsibility reticulation model, provided considerably cheaper in real terms, power! They also sold all the electrical appliances, so it was in their financial interest, to keep a cap on power prices!
Most of Greece's current economic problems can be traced back to tax avoidance, and just too large a public service sector!
Are we following in those hugely incompetent footsteps?
Rhrosty.

We do need to revitalise the private sector!
The only way we can now do that is through quite massive tax reform and simplification, and cheap energy. Both of which, I've dealt with in some detail elsewhere.
Read, Thorium, cheaper than coal!
After that, we really do need to start investing in our own people and their better ideas.
If money, (venture capital) is a problem, then quantitative easing, almost doubled domestic money supply, and a consequent lower AUD beckons?
Rather than continue to insanely rely on debt laden, carpet bagging, foreign investors.
Who seem to specialize in tax avoidance, asset stripping, off-shoring profits and real wage reduction?
Except for the senior executives, whose real comparative incomes have more than tripled, in just two decades; and for no increased productivity or performance, but rather, just the opposite?
If only we could import some Asian administrators under 457 visas?
I bet we could reduce extremely excessive corporate salaries by a full two thirds initially, and likely wind up with far more pragmatic and experienced decision makers?
Who in their turn, would cultivate and mentor the next generation of senior executives, from within their own organisations, as a vastly more sane, and significantly less expensive option!
Rhrosty.

Rhrosty I think you will like this one.

I mentioned recently an old mate, a fitter, & a hard old Scotsman, who became frustrated when handing over the production management at Gilbarco, to a couple of graduate engineers. What they had learnt at uni was proving basically useless in production management & programing.

One of his main bitches was the ideas coming from the board, since the company had gone public, & state & commonwealth government interference.

He pointed out that the company had been started & grown to prominence when a couple of plumbers, disgusted at the quality of the gear they were installing at service stations, decided they could do better. They could & did, & built a large successful company.

The old fitter reckoned the problem was professional management. Rather than finding the best person do the job, they found the person with the most bits of paper saying they could do the job.

This way they were covered if their choice failed. It could not be their fault, the new chum came well credentialed. He reckoned they should remember the company was built by a couple of tradesmen.

The fact that he was a tradesman may have coloured his judgement a little, but he had run production for 20 years very successfully.

What he wanted was government to get the hell out of the way, & let people run things the best way they knew. That was always better he reckoned, than anything dictated by bureaucrats & academics.

After one of his rants, he would look at me, remember I had one of those bits of paper, & say, "well you don't feel like one of them". High praise indeed, coming from him.