The irreversible bloat of bureaucracy

Imagine an economy where nobody ever gets fired; the unemployment rate is always low; GDP always goes up. How wonderful – and even better – we're living in it.

And it's a disaster.

The ABC recently reported that over 8 million Australians now rely on some form of government income, up from 6m a decade ago, with mental health increasingly a route to benefits. The NDIS is growing at a fantastic 25% a year.

Australia's institutional drift isn't best understood as incompetence or corruption in the traditional sense. Institutions are drifting because they are structurally incentivised to do so.

As systems scale, the incentives that govern them change. What begins as outcome driven problem solving gradually becomes process-driven system management.

After WW2, the state was smaller with a clearer mandate. Success was measured by outcomes for example, infrastructure built, problems solved. Department heads were usually drawn from engineering, military, or domain expertise. They were technocrats. The NASA team that put man on the moon were not bureaucrats, they were engineers.

The state was a means to an end.

Now, the state is much larger and more complex. Success is measured by procedural integrity, stakeholder management, and risk management. Paths to leadership are dominated by policy, advisory, or administrative careers. Failure is diffuse, hard to define, and rarely detrimental to a career. The government is an employment bureau, as well as a service provider.

In other words, the state is the end as well as the means.

Once a programme is big and complex enough, a predictable pattern emerges. As programmes expand, so do the administrative layers. Careers and industries attach themselves to the programme. Oversight and compliance explode as risk tolerance collapses. People stop asking 'does it work' and instead want to know 'is it being administered correctly?' The latter is the safest way to protect one's job in the bureaucracy.

At that point, the system is no longer built to solve the original problem; it is optimised to sustain itself.

For example, multiple analyses from groups including the Australian Industry Group, Commonwealth Bank and the Institute of Public Affairs estimate that roughly 70–80% of net jobs created in Australia since 2023 have been in the public sector or government funded 'non-market' sectors of the economy.