It’s that time again when accountants all over Australia and New Zealand are finalising their clients’ tax returns: my own have just sent me ‘a little reminder’ to get on with it.

And what a tax take it is.

This year, Australia’s treasurer, Jim Chalmers, expects to rake in A$563 billion (individual and corporate income tax make up most of it, at A$426 billion): that’s roughly A$27,500 per adult. In New Zealand, the minister of finance, Grant Robertson, will haul in NZ$124 billion, with income tax again doing the heavy lifting (NZ$80.6 billion): that’s some NZ$31,000 per adult.

While it’s a wrench to fork it over, at least we don’t have to reach quite as deep into our pockets as some others do. This year, the Australian Government’s revenues will be about 34.8% of gross domestic product (GDP), and New Zealand’s around 37.4% of GDP, a bit below the 39.6% median for all advanced economies. And to be fair, we know our tax mostly goes on things we don’t begrudge. The big-ticket items on both sides of the Tasman are the social welfare safety net, pensions, health and education. It’s good, too, that we have solid reporting on where the tax comes from and where it goes: both countries publish transparent fiscal accounts to professional accounting standards.

Lessons in return on investment

That said, there’s also a fair amount of evidence that our taxes aren’t being spent as efficiently as they could be.

Here’s a prime example. In Australia, despite substantially increased spending at both commonwealth and state level, education outcomes, as measured by the Organisation for Economic Co-operation and Development’s (OECD) international PISA (Programme for International Student Assessment) tests, have been steadily getting worse. New Zealand’s PISA results are very similar.

Yes, test results aren’t everything, and maybe our schools and colleges are turning out well-adjusted people who can work a smartphone as well as the rest of the world, but I still find these patterns of absolute and relative decline disconcerting, given the scale of the resources thrown at them.

Running out of road

Infrastructure also has not seen the best use of our taxes. Last year, Infrastructure Australia pointed to “poor productivity, the increasing number of insolvencies and cost overruns, and delays in the delivery of major projects”, and New Zealand’s performance also has its issues. This year, I drove the Waikato Expressway and Transmission Gully roads: big improvements, but I’d have been happier if Waikato hadn’t taken 30 years and Transmission Gully even longer.

It doesn’t give you great confidence that the next round of infrastructure challenges – such as Australia’s A$320 billion bill to modernise and decarbonise electricity, or New Zealand’s NZ$120 billion backlog of overdue water investment – will be handled well.

Every dollar counts

What could we do to get better outcomes from our tax dollars? Here are five ideas, in rough order of priority.

1. Make a plan

First, have an internally consistent, overall spending plan – what used to be called an ‘indicative plan’ – showing what you hope to achieve over a given time frame and how the various spending initiatives pull together to get there. Every small- and medium-sized business that’s ever gone to the bank for some money will have had to bring along a business plan. What exempts the biggest spenders in both economies from the same discipline?

The current budget process isn’t terrible, but it’s more a grab bag of ministerial ideas than an integrated whole-of-government perspective.

“Every small- and medium-sized business that’s ever gone to the bank for some money will have had to bring along a business plan. What exempts the biggest spenders in both economies from the same discipline?”

2. Interrogate the plan

Put all major infrastructure proposals through a rigorous and independent cost-benefit kicking. Infrastructure Australia and the New Zealand Infrastructure Commission Te Waihanga look at the obvious candidates to don the boots, or even wield a veto power.

The tool here is multi-criteria decision analysis: it scores projects against different criteria – economic, environmental, resilience, equity or whatever’s important to you – to figure out the maximum overall bang per buck.

Better still, it can be used to design an optimised portfolio of projects which allows for the interactions between them. It’s no use having lovely ideas about electric cars, for example, without figuring out what electricity generation and transmission will be needed to make it happen. Joining up the dots might have prevented my coming off the shiny new Waikato Expressway into the ongoing traffic choke hold at Tirau.

3. Ditch the silos

Break down the silos, and the silos within silos. Government spending is over-tightly regimented, with agencies typically receiving earmarked funding for specified outputs. A hospital, a police department, a competition authority, will get $X for this, $Y for that, $Z for the other. It may be a good way to demonstrate accountability for people’s tax dollars, but as a way of responding quickly and effectively to changed needs or priorities? Not so much.

4. Experiment more

The public sector tends to be risk-averse and ministers even more so: nobody wants to front the gotcha media when an innovation fails. There’s also strong institutional inertia to kee on doing what you’ve always done, even if ineffective. Einstein’s definition of insanity – doing the same thing over and over and expecting different results – comes to mind.

When there’s growing evidence that existing spending programs aren’t always hitting the spot, there needs to be active investment in potentially better ideas.

5. Teach MPs budget management skills

Help ministers and public sector managers use their budgets better. Even battle-hardened professional executives would find managing the A$110 billion Australian health spend or the NZ$29 billion New Zealand equivalent a big challenge. I’d make a stint in the private sector mandatory for anyone aspiring to be secretary or deputy secretary: a win-win all round, as they’d get the required experience and their employers would get some serious brainpower.

And, I’d tee up management training for ministers. As the UK’s Institute for Government says, “There is currently little in the way of formal training for people who take on government roles. From first-time ministers to those promoted to cabinet and from non-executive directors to special advisers, many people in government are expected to learn on the job.”

What’s true there is true here, too: complete novices can’t be expected to direct multi-billion-dollar programs effectively.