The Risk of “Spread-The-Work” Schemes and Bureaucratic Bloat
Australia’s GDP per capita—how much each person contributes to the economy—is consistently lower than other developed countries. In fact, it’s less than half of the GDP per capita of the top four countries ranked in 2025.
So, what’s causing this?
One possible answer lies in an idea discussed years ago in Henry Hazlitt’s Economics in One Lesson: Spread-The-Work schemes, along with the bloat created by bureaucratic and fraudulent welfare sectors.
The Problem with Spreading the Work
Hazlitt’s book, written in 1946, argues against policies that try to spread work across more people by enacting policies to reduce working hours to create more jobs. The idea behind these policies is that if people work fewer hours, more jobs will be available for others. But Hazlitt explains that this doesn’t actually help the economy. It just divides the same amount of work among more people, which means everyone earns less and the economy doesn’t grow.
If Australia focuses on these types of policies, it might not improve the economy. While the goal may be to create more jobs, it doesn’t actually make the country wealthier. Instead, it could keep Australia’s GDP per capita low compared to countries that focus on policies encouraging workers to be more productive.
Boosting the Economy by Increasing Productivity
Countries with high GDP per capita—like Luxembourg, Ireland, Switzerland, Singapore, Qatar, and Norway—achieve their wealth by focusing on productivity. This means they find ways to encourage workers and employers to be more efficient. Tax incentives, better technology, relevant education, and investment incentives allow people to do their jobs faster and smarter.
Australia, however, needs to stop just thinking about creating more jobs and instead focus on improving how much each worker can produce. More jobs with the same amount of work won’t make the economy grow. To raise GDP per capita, Australia should focus on helping workers become more productive, not just creating more jobs.
Technology, Investment, and Cutting Bureaucratic Bloat
Another reason Australia’s GDP per capita is lower than top countries is that it hasn’t incentivised investment in technology and tools that help workers do their jobs better. Countries with high GDP per capita invest in machines, technology, and skilled workers that help make labor more efficient.
But it’s not just about investing in technology and capital—it’s also about cutting waste in the system. In his book, Hazlitt discusses the importance of removing unnecessary bureaucracy, which he calls “disbanding troops and bureaucrats.”
Bureaucratic bloat can slow down the economy and hurt productivity because it involves inefficient use of resources—government workers who don’t directly contribute to economic output. These workers often consume valuable resources without adding much to the economy.
Australia’s government sectors, like many around the world, have grown in size over time. While some public services are important, when there’s too much bureaucracy, it can drain resources that could be better used in industries that actually create wealth. By cutting down on bureaucratic waste, Australia could free up resources to boost productivity in other sectors.
Welfare Fraud and the Impact on GDP Per Capita
Another issue affecting Australia’s GDP per capita is the problem of welfare fraud, particularly among individuals who exploit the system, known colloquially as “dole bludgers.”
Some people intentionally rort the Centrelink system to receive government payments without making any real contribution to the economy. This not only costs the government millions of dollars but also discourages people from actively participating in the workforce.
When individuals take advantage of welfare programs without working or contributing productively, it reduces the overall economic output, further lowering the country’s GDP per capita. Rather than helping the economy grow, this misuse of government resources contributes to inefficiency and slows down economic progress.
Punitive Taxes Can Hurt Productivity
Another factor holding back Australia’s productivity is high taxes. When taxes are too high, many employees decide it’s not worth working extra hours because they lose a large portion of their income to taxes. For example, some workers choose to only work 3 or 4 days a week instead of 5 because the extra income from that 5th day gets taxed so heavily that it’s not worth it. This results in fewer hours worked, which reduces overall productivity.
When workers aren’t motivated to work as much due to high taxes, the economy suffers. Reducing the number of productive hours worked means less output and a lower GDP per capita. This could be another reason Australia is falling behind countries that have lower tax rates or more efficient tax systems that encourage people to work harder and produce more.
Changing the Economy’s Focus
Australia has relied a lot on natural resources like mining, but this doesn’t create as much wealth as a well-diversified economy.
Countries at the top of the GDP per capita list usually also have strong financial, technology, or service industries that boost productivity. Australia needs to focus on these kinds of industries to boost productivity and raise its GDP per capita.
The Way Forward
If Australia wants to catch up with the top-ranking countries, it needs to shift its focus. Instead of trying to create more jobs by spreading the work, the country should focus on allowing workers to be more productive.
This can be done by incentivising investment in technology, relevant education, and industries that help people do their jobs better and faster. At the same time, Australia should focus on cutting wasteful bureaucracy, fraudulent welfare, and reducing the tax burden to encourage more hours worked and investment in productivity-boosting sectors.
Hazlitt’s message is clear: trying to spread the work to create more jobs won’t lead to greater wealth or a stronger economy. It just looks good for a politician. Instead, Australia should focus on boosting productivity to raise the country’s overall output and wealth.
Cutting bureaucratic bloat and lowering taxes can also play a major role in helping Australia become more competitive and close the gap with countries that have the highest GDP per capita.
Written by John E Middleclass
Published April 2025