You think corruption is costly? An even greater cost is piling up under our noses

Would you rather get a better bang for billions in spending or bash a pollie?

Corruption, whether in government, the private sector or the public sector, like statutory authorities or universities, is hellishly expensive.

Unless it's detected, the cost is hidden, but we know it's there. There may, however, be an even greater cost that we miss, poor administration. Trillions of dollars flow out from federal, state and local governments every year.

Why we think we've achieved something when we discover a government seat got a few extra grants, I don't know.

Let's kick a pollie is almost a national sport so there's an outcry when some money goes to government marginal seats that is even slightly out of kilter with where, on the numbers of seats held, one might have expected it to go. Should government seats get an extra advantage, no. Do they? Maybe.

In terms of dollars spent, these grants are not so much small beer as they are nano molecules thereof. But hey, you get to kick a pollie. The sheer volume of money being outlaid by the Commonwealth makes the money for grants that may be affected by ministerial decisions almost negligible. That doesn't excuse any wrongdoing. It just highlights we're not looking in the right places.

An Indonesian minister shared a home truth with me when I was immigration minister and we were being targeted as a destination offering by criminal people smugglers.

He smiled and said: "Put honey on the table and the ants will come." It's not rocket science.

We should be looking at the trillions not the millions.

Crooks are attracted by money or advantage. Put a big pile of money out and the crooks will come. They come in different forms depending on the opportunity that presents.

Here's a few ways they can appear.

Hiding in plain sight can be a great way to avoid detection. So if there are buckets of money for teaching post-secondary courses to overseas students, you just go out, set up your training provider, enrol a pile of non-existent students and take the money.

Looks like a duck, walks like one. But just think through how decent bureaucrats are meant to pick up that some of your students don't exist. Imagine the systems and cross checking to detect that.

Dollars to detect fraud help avoid more fraud. But those dollars aren't going into training students. A welfare cheat also hides in plain sight. By the way, so does the rich cheat who avoids some taxes on a beach house by falsely claiming it is the principal place of residence for one party in the couple.

A sudden big outlay of expenditure is a crook's dream.

A new team of bureaucrats, experienced but maybe not at working together, a new group of contractors, new contracts, new locations, maybe a public focus or demand on delivery dates forcing everything to be "jump started".

Within this enormous project, there'll be people experienced at the macro level and others who have knowledge of one small but important niche. Think any big infrastructure project. Not convinced? Think NDIS. Give yourself the job of setting up a system to ensure there's no rip-offs in that big bucket of money. Not easy.

Unrelated to money there's an ugly example of how the environment around the need for sudden action attracts bad players. After a tsunami, or other natural disaster, there are kids that need immediate care. Experienced aid workers will always be on the lookout for creeps who will prey on the kids rather than help them. Sometimes that kind of example of a person makes you wonder why we call ourselves humanity.

Specialist areas throw up serious risk because it's a specialist area and it's easy to fool those who aren't specialists. Defence spending has long been the subject of agonising discussions.

There's more than one key problem here, but, at least one is that it's a specialist area. Everyone else can prepare to be snowballed by the experts. Let's face it: if you are an expert, you are going to let your preferences (which may not win in a competition of experts) take precedence. Toss into that long lead times, leading to further negotiation and contract variations and bingo: somebody is going to make some extra money out of the situation.

There's another area that raises the risk of money not going to the best place. The bureaucrat club can show a disproportionate preference for what they undoubtedly see as the best tender but may, on closer inspection, simply be a mate's bias. Some of my mates in the arts used to refer to the Australia Council as Centrelink for the arts. A harsh assessment, maybe. But let's not kid ourselves. Bureaucrats are no less likely than anyone else to let their personal preferences interfere in what ought to be objective assessments.

You'd call it mismanagement but others could say corruption.

Last but not least is the issue of protective overspend. We like to be critical and public servants are rightly aware of that. So if you're designing a detention facility as an example, you might be very conscious of the risk of escape or the risk of people being injured in a disturbance, such as a riot.

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You would imagine the questions at estimates committees as to why the facility didn't have adequate preventative security. To avoid such risk and criticism, you might order security (locks, extra fences, et cetera) as your life depended on it. In other words, you'd spend like a drunken sailor to mitigate the risk. We're partly to blame because we are so keen to be critical, after the event.

Mismanagement is possibly an even greater drain on effective spending than corruption. Given the cash flow through the federal, state and local governments, a degree in public administration should maybe be a primary requirement for any employee. The mere preponderance of people with such a degree would be no guarantee of better management but it would be a good start.

Sometimes we get distracted by the game of "let's bash a pollie". They should be under scrutiny. No doubt. But the real opportunity for us is to get better value for the billions spent every year. If our universities focused on offering a good range of public administration courses we might have a chance.