Prompted by comments from Uncle Milton and Chris Lloyd under my previous post about an apparent blowout in state public sector numbers and wages over the last few years, I decided to look a bit more closely at the claims of the IPA’s Mike Nahan that state governments have “squandered” the “growth dividend” from GST revenue and the international resources boom.
Nahan says that state public sector wages have grown by 9.3% over the last 3 years, while state public sector numbers have grown by 11.2%. Now the wages growth doesn’t appear to be much higher than inflation, and a quick Google search suggests that it isn’t any higher than wages growth in the rest of the economy. Wages growth nationally for last year was 4.5% and for the year before 3.6%. So the state public sector figures simply don’t bear the adverse interpretation that the IPA (anc conservative commentators like Piers Akerman) put on them.
What about the actual size of the state public sector? Well, what Nahan seems to have done is to focus on only the last 3 years while ignoring events before that time. It may well be that state public sector numbers have increased by 11.2% over the last 3 years, as he claims. But, according to this document from the Public Service Association of NSW, the picture in that State at least is very different if you look back further than the last 3 years. State public sector employment in NSW shrank by 9.5% between 1980 and 2003, when NSW’s population grew by 29% over the same time period. The number of public servants per 1,000 population shrank from 60 to just over 40. I didn’t locate similarly detailed figures for Victoria, but it’s a fair bet that the Kennett government engineered reductions at least as severe as NSW (and indeed almost certainly more so given privatisation of trains, trams etc, which didn’t occur in NSW). That would explain Uncle Milton’s observation that Victorian public sector employment today is still 25% lower than when Kennett took office.
Thus, it may well be that what Nahan and the IPA seek to characterise as “squandering” the growth dividend is at least arguably more accurately seen as state governments prudently taking the opportunity to partially reverse previous excessive public sector pruning that had left them too short-handed to efficiently provide basic services to the community.
Far be it for the likes of me to defend the State governments. And this is only an anecdote, but here in South Oz, the South Australian Police Force is in a permanant recruitment campaign mode. They are really struggling to find the right people to join them.
So much so that they are importing cops from England. Meanwhile, in the swank block of apartments that I reside in, unit four has been taken by a young lass from Nigeria, who the landlord told me is a nurse. So, the South Australian government is going far and wide looking for people.
So if anything, I would guess that public sector wages should, if anything, go even higher, since the current wages aren’t high enough to attract suitable candidates.
(Meanwhile the poor nurse from Nigeria is a woebegotten sight first thing in the mornings. It’s a hell of a shock coming from tropical climes to freezing Adelaide mornings.)
Meanwhile here in sunny Qld, the public sector is bleeding planners and engineers as private engineering/consulting firms snap up people so they (the firms) can respond to the substantial government infrastructure programs of recent years. And Qld similarly recruits doctors, nurses etc.
And, it would seem, citizens are demanding higher levels of service from governments – so who do the IPA think should deliver this – robots? Marmosets?
The Kennett solution of cutting huge swathes of public servants may be required nationwide. Not to the teachers, nurses and police but the research officers and program evaluators that fill state public services. This is a one off solution that doesn’t address fundamental problems but it does buy a reasonable amount of time.
But the Kennett Solution is not without its cost. The Victorian public service consists entirely of people who are program managers and service deliverers and is now almost devoid of people with any sense of long run policy development. The advice that goes to government is very short term. Occasionally a consultant gets hired to provide some strategic thinking.
I’m sorry to say that this sort of intellectual dishonesty is pretty par for the course for the IPA. If you like right-wing think tanks the CIS is much better value.