How will the Tasmanian government cut 700 from its ranks?

By David Donaldson

August 29, 2014

Some 700 public service jobs will be cut and a one-year pay freeze instituted under the Tasmanian budget released on Thursday evening, amid concern redundancies could see a decrease in the quality of advice to ministers and structural support for services.

The government is arguing the pay “pause” for bureaucrats will save 1000 jobs “embedded” in previous government budgeting. Previously, the Tasmanian Liberals had warned they may need to cut 1500 jobs. Treasurer Peter Gutwein said in a statement:

“The choice was simple — it was the wage pause or 500 more people would lose their jobs. We chose the wage pause because there are 500 public servants and their families who would be better off with a pay pause than no pay at all.”

Gutwein says individual departments will be tasked with making the cuts across their units.

State government employees were given a few details yesterday about how the budget will affect them, with Department of Premier and Cabinet rumoured to be losing 20 FTE positions by next financial year.

The Mandarin understands that some bureaucrats are sceptical about whether the cuts could be achieved, given the difficulty the previous government had in reducing the public sector workforce. While the need to get rid of “deadwood” is a common phrase, so is the fear that the “best and brightest” — those most able to find new jobs — will be the first to go.

In a public sector as small as the Tasmanian state service, reducing staff is seen as difficult, as employees from different areas tend to know one another well. The job market in Tasmania is tight, so fears about job safety are likely to make thinning the ranks more difficult.

Some are reportedly critical of the Community and Public Sector Union’s “slippery slope” arguments on the issue of the pay freeze, with many preferring the prospect of working four days a week to losing their jobs.

CPSU Tom Lynch said yesterday he’s sceptical the number will be limited to 700:

“I think Peter Gutwein needs to come clean with the Tasmanian people, he’s been too smart by half saying he’s protected 800 jobs, all he’s really done is taken a 2% wage increase off public sector workers.”

And while bureaucrats are being dropped, the government has given an extra $65 million to health and $5.9 million more for police. There is a concern that although increasing funding for front-line services made good politics, shrinking the public service could mean weaker support for the nurses, teachers and police that the public see.

In addition, over 20% of all boards and committees will either be abolished, merged or have their membership reduced.

The moves are being portrayed by the government as an attempt to rein in the excessive spending of the previous Labor/Greens government. Labor Opposition Leader Bryan Green put the cuts down to the Liberals over-promising before assuming government:

“The reality is the Liberals will axe 700 jobs and impose cuts across government departments. They are also cutting people’s wages and cannot rule out even more job losses. “The Liberals have been on a spending frenzy and now Tasmanian workers are paying for it. Above all else this budget is about forcing Tasmanians to pay for their extravagant election promises.”

Tasmania’s public sector accounts for a larger share of its economy than anywhere in Australia other than the Northern Territory, according to Budget Paper No 1:

“… while nationally General Government employee expenses have been flat at around six per cent of GDP, since 2003-04, Tasmanian General Government employee expenses have increased from approximately 8.5 per cent to 10 per cent over the same period. Over the past decade, this increase in the level of expenditure was the highest of all jurisdictions. In 2012-13, Tasmania had the second highest level of employee expenses as a percentage of GSP of all states and territories, behind only the Northern Territory. However, as recognised by the Commonwealth Grants Commission, the cost of delivering a number of government services in Tasmania is also higher than the national average …

“Average public sector wages in Tasmania are only four per cent lower than those of public servants nationally. However, compared to the private sector in Tasmania, the Tasmanian public sector is (on average) relatively well remunerated (Chart 3.6), which may lead to economic inefficiency if the wages are not justified on a productivity basis. According to the ABS, average annual wages for Tasmanian public sector employees in 2012-13 were 25 per cent greater than the average in the Tasmanian private sector. This compares to a nine per cent difference nationally …

“The number of employees in the Tasmanian public sector has also grown strongly which, in addition to wages growth, has driven General Government employee expenses. From 2000 to 2011, the number of General Government employees grew by 25 per cent from around 20 000 Full Time Equivalents (FTEs) to over 25,000 FTEs. Over 2011 and 2012, there was a modest reduction in employment, in response to Budget pressures but, since the beginning of 2013, there has been a return to considerable growth in FTE levels. As at 30 June 2014, the number of FTEs in the General Government Sector was approximately 24,500.”

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