What’s wrong with the Rem Tribunal’s windfall to senior public servants? (Short answer – it’s a windfall!)

Just that – it’s a windfall. Here’s Henry Ergas’s well considered response to the latest depredations of managerialism. Nice to be able to agree for once with someone for whose breadth of learning I have such a high regard!

The bargain that matters is the lifetime return to talent in the public service, not the return to talent at one point in time. As a result, the tribunal should have examined that whole-of-career reward and how it has evolved. And had it done so, it would have noted four facts.

  • First, overall public sector pay has tended to rise more rapidly than private sector pay.
  • Second, the senior executive of the public service has expanded greatly, both absolutely and relative to the service as a whole, making it more likely that talented officials secure its rewards.
  • Third, while secretaries’ pay lags the private sector, it has more than doubled over the past decade, further adding to the lifetime compensation ambitious public servants can hope to achieve.
  • And fourth, it has become common for former mandarins to earn substantial amounts as consultants, making the lifetime returns to reaching the top greater yet.

Unfortunately, the tribunal ignores the lifetime dimension of earnings and gives no attention to related indicators such
as the depth of the talent pool and the extent of competition for top public service jobs.

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KB Keynes
KB Keynes
9 years ago

I am not going to try and read something on the Australian.

The main argument which can be made against this decision as well as most wage determinations at a middle and senior level in any organisation ( private or public) is that the justification for the rise is simply pattern bargaining.

This is not available to anyone else.

It shouldn’t be available to anyone period as it is not an acceptable reason.

I would be very surprised if Ergas makes this point.

Tel
Tel
9 years ago

You can say goodbye to ever seeing a balanced budget under Swan. Ever.

Bill Posters
Bill Posters
9 years ago

“Henry Ergas’s well considered response”

Sure, and the moon is made of blue cheese.

Dan
Dan
9 years ago

It’s completely unnecessary.

Either senior staff in the public service are in danger of being attracted to the private sector by higher wages; except the public service has many very impressive senior staff who are, on any analysis, frankly well-remunerated and moreover talk about the importance of working somewhere, well, important.

Or senior staff in the public service don’t have skills that are particularly generalisable to the private sector, in which case it’s literally pissing away money.

It’s made particularly outrageous by the fact that non-SES staff have had to fight tooth and nail for decent deals for the past few years.

Penny
Penny
9 years ago

It will be interesting to see whether this creates a wages breakout for the SES.

From where I sit there are a lot of Deputy Secretaries (SES Band 3) who are like Vice Presidents of the United States – not many will ever be appointed Secretary (and will only sit in the big chair when the boss is away). In the mean time, it is not clear what they do, except sign internal minutes, chair meetings, and clear Departmental drafts of answers to parliamentary questions.

I would be disappointed if Dep Secs got a big pay rise in the wake of the Rem Trib ruling. They aren’t responsible for much. These are the invisible men of the APS. Then there is trickle down for the rest of the SES….

Meanwhile the grunts in the APS are left with the breadcrumbs – currently a miserly 3%pa (maybe one or two grand more a year) – plus the increased prospect of redeployment or redundancy in a tightening budgetary environment.

Marks
Marks
9 years ago

I am not sure that Henry Ergas thinks he is still living in the past where a public servant could and would work in the ps all their lives. From this perspective, a whole of career analysis makes sense – including such things as security of tenure, defined benefit pensions etc etc in return for lower immediate point in time salary.

We do not live in that world any more. There is no such thing as guaranteed tenure, nor defined benefit pensions, and people move in and out of the ps depending on the ‘point in time’ benefits offered in the market place.

The ‘mandarins’ now retiring and getting consultancies are (I am willing to bet) the last of the generation who have defined benefit pensions. Younger people will move into consultancies throughout their future careers since there is no penalty for leaving the public service to do so – they carry their accumulated super with them to the new job.

Did people really think that in a market economy, ps salaries would stay the same over time if the whole of career benefits mentioned above were removed? Really?

Patrick
Patrick
9 years ago

What market economy Marks? The market economy for public servants?

Marks
Marks
9 years ago

Patrick, have you worked in both private and public sectors?

If you have, you will know what I am getting at.

If you have not, I guess no point in trying to explain.

Or do you think that a clerical or management or technical job in a large public organisation is that much different from a large private organisation? For example, as a private contractor paid by the quarter hour, I have just worked for ten weeks in a public sector organisation doing exactly the same work as public servants. The only difference being, they had different coloured security passes, and I was being paid three times the amount (net of overheads :) as them. Exactly the same work content. I supply my labour, they supply the $$$. So, yep, there is a market out there – one in which I am happy to participate. There are mining positions coming up which pay even more.

Dan
Dan
9 years ago

Hang on Marks: you’re conflating the SES and the line staff.

The line staff do have something damn near security of tenure.

SES do not, but I can’t think of one being shown the door just because the work was getting a little thin on the ground.

I don’t know how generalisable the skills are at the SES level; my sense is that it depends on the individual and skills in question, and moreover that the flow is more one way (private to public) than the other.

marks
marks
9 years ago

Hm Dan, I got the impression that Ergas was talking about the SES mainly.

As well, given the forced redundancies of the nineties in the various state and fed public services, I would suggest that security of tenure is not as good as people imagine.

The point being still that Ergas seemed to be talking about the present day ps as if it were the same type of organisation as thirty years ago, rather than as it is today.

Dan
Dan
9 years ago

tbh I didn’t read the Ergas article as it’s behind that lousy rag’s lousy paywall.

As it happens a close family member (who had actually worked in the private sector for a bit in the 80s as it happens), a bit below SES level, was offered a package when Howard came to power and took it, but his other option would have been to be transferred. Not fired.

For a more recent example – the incoming Australian Statistician recently tried to fire a bunch of EL-level staff (ie. again, a bit below SES); the decision was taken to the Australian Industrial Relations Commission who found that the staff needed to be reinstated, the Australian Statistician appealed the decision (yeah, I know) and again the AIRC found that the staff needed to be reinstated, by which time plenty of them were happy to take the money and not look back. Mission accomplished, I suppose. But important to note that Plan A failed.