Tasmanian budget: did Gutwein just out-Hockey Hockey?

By Stephen Easton

May 28, 2015

With a conservative government declaring the “heavy lifting” of its austere first budget is now finished and hoping infrastructure projects will create thousands of private sector jobs in the next few years, there are a lot of parallels between today’s Tasmanian budget and that recently released by Joe Hockey.

The $58.6 million deficit in 2015-16 was halved from the forecast last year. A healthy $101.5 million surplus is now forecast in 2016-17.

Coincidentally, there’s even a plan to build up the northern parts of the Apple Isle to match the federal government’s overtures towards the north of the continent.

There’s $50 million more for health and another $14 million for patient transport to help calm the horses, along with $300 million to subsidise things like rent, travel, utilities and rates for the elderly and disadvantaged groups. But all that was announced ahead of time and, by design, Treasurer Peter Gutwein didn’t drop any bombshells this afternoon.

The 12-month pay freeze on senior executives is to expire and the government is sticking to its policy of 2% per annum wage increases for the rest of its workforce.

“The police,” Gutwein said in his budget speech, “remain on their 18-month wage freeze and their decision to put more police on the beat instead of a pay rise should be commended. The Government is grateful for the responsible way in which they have conducted themselves, they are an exemplar to the public service.”

The target is for 1200 less full-time equivalents on the payroll over the forward estimates, and Gutwein says he’s on track to achieve his plan of cutting 821 FTE this year.

“Over this year and the Forward Estimates the remaining reduction in FTEs equates to only around 0.5% of the total public sector each year,” he said. “With staff turnover averaging around 2% a year, this can largely be achieved by using vacancy control and natural attrition, and without the need for any more frontline savings.”

After Will Hodgman’s government last year tasked Tasmanian mandarins with administering large cuts to the state’s public service, it is now optimistically forecasting a return to surplus in one year’s time. Of course, unions and at least one angry public servant who took a parting shot on the way out the door have criticised the downsizing.

David Adams
David Adams

Vacancy control is the number one efficiency tool open to public service leaders and its a blunt instrument, according to David Adams, a professor of management and innovation at the University of Tasmania and former senior executive in the Victorian and Tasmanian government.

He says leaving it up to the mandarins to find the savings amounts to Hodgman and his team abrogating their leadership role with regard to the bureaucracy. “This of course means that in place of systematic and strategic reform, we tend to have ad-hoc, incremental decisions, many of which simply light a fuse for an explosion down the track,” he told The Mandarin.

“Basically, what senior public servants do very effectively if they are told to cut costs is they’ve got a standard box of tools, and way up the top is vacancy control. Vacancy control is a very blunt instrument, in that it essentially relies on something other than policy to trigger it, namely, new roles emerging or people leaving, so it isn’t driven by policy or strategy; it’s opportunistic.”

“So the point I make is that in the absence of clear policy direction, public servants will use these efficiency strategies, which may or may not in the long term have the best outcomes for, in Tasmania’s case, vulnerable Tasmanians in particular.”

One area of the public service where the Hodgman government hoped to find savings — supplies and consumables — has provided less than the $119 million initially expected, which was revised down to under $97 million in February. If vacancy control is number one in the mandarin’s savings toolbox, Adams says consumables is probably about seven or eight on the list.

“They’re often promoted as areas of significant savings but there are a couple of issues, one of which is the transaction costs of getting the savings is quite high,” he said, adding that in any case, it does send a message to bureaucrats.

“It gives a message about keeping an eye on expenditure at all levels in the organisation, and it gives a message about not being seen to be wasteful, particularly in the public’s eye.”

And, much like Abbott and Hockey, Hodgman and Gutwein are now looking to set themselves up for a smooth run into the next election by directing funds to capital outlays rather than recurrent spending, with the infrastructure being announced now to be delivered over the next couple of years.

The public sector’s ‘new normal’ from a Tasmanian perspective

Adams says the old view of the public service as a stable, primary source of both planning and delivery has given way and it is now “simply another resource to implement policy” regardless of which major party is in power, and he suspects a lot of leaders still need to adapt.

“So the first significant change is the ability of public service leaders to see their departments as a bunch of resources that can be used more flexibly than they could be in the past, and the second challenge is to demonstrate that they have a value proposition above that of the private or community sectors in terms of planning or delivery,” he told The Mandarin.

“And that value proposition needs to both in terms of efficiency, in terms of the planning and delivery side, but also it’s appropriateness in terms of what people expect the public service to be, which in particular involves accountability through to ministers of the parliament and the electorate, so public service managers need to put more effort into demonstrating that side of the value proposition, not just the efficiency side.

“At this stage, nationally, that’s really in its infancy.”

And, as many others have noted, Adams sees the rise of influential ministerial staffers over the past 20 years as another key feature of the current public service paradigm, which has the danger to politicise reform processes through their private advice on policy and communications.

“That means the traditional role of the public service can be compromised in that process in particular, because private office staff are neither elected nor accountable through the mainstream Westminster processes,” he said, pointing out the only mechanism for appeal is to ministers themselves, who employ the unwelcome advisers. For Adams, these political buffers between ministers and mandarins are just another nuance of our “Washminster” system that gets in the way of old-school accountability.

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