‘New fiscal principle’ links public service jobs to population

By Stephen Easton

Wednesday June 15, 2016

The Queensland government has pledged not to let its public sector workforce grow any faster than the state’s population, in what Treasurer Curtis Pitt described as a “new fiscal principle” in his budget speech yesterday.

The number of state employees will be kept under the average rate of population growth over the four-year forward estimates, according to Pitt, in order to keep a “sustainable” public service after reversing some frontline staff cuts made by the previous government.

“Given the significance of employee expenses to the state budget, this new fiscal principle will be another important contributor to the government’s prudent fiscal management framework going forward,” the Treasurer said.

The link between population and public sector expenditure is especially strong at state level but rarely features in government rhetoric, whether it focuses on the need to deliver vital services or to slash a supposedly bloated bureaucracy. Pitt says the new principle aims to strike a balance between fiscal responsibility and maintaining high-quality services.

Of course, there is no obvious way to determine the perfect amount to spend on public services and the question is central to most if not all state and territory budgets. Nonetheless, tying employment levels in service delivery to population makes good sense.

In line with Labor’s platform, Pitt said the government had done what it could to “restore” public sector jobs after cuts made by the former conservative government which, he claimed, “severely damaged” frontline services. He said 86% of new public sector jobs under the Palaszczuk government had gone to the Health and Education portfolios.

The budget papers show employment levels going up from 210,000 in 2015-16 to 215,000 for the coming financial year.

Qld ministers will also be asking public servants to “reprioritise programs” in an effort to come up with about $500 million in savings by 2019-20, mostly from Education, without resorting to forced redundancies.

And in a re-run of last year’s budget, Pitt is again under fire from the Opposition for a supposed “raid” on defined benefit superannuation entitlements, and again defending the plan as a responsible use of a large surplus in the fund to pay for them. This year’s budget will make use of $4 billion from the fund to help pay down debt and fund infrastructure.

“The Government will manage the Defined Benefit Scheme to minimise over-funding and based on the Australian Prudential Regulation Authority funding standards that apply to similar corporate schemes,” the Treasurer said.

“The State Actuary has advised that a repatriation of up to $5 billion could be undertaken while maintaining consistency with APRA funding standards.”

In the face of reduced revenue, particularly due to drops in commodity prices, Pitt maintains the plan is the best way to steer the state government through current economic conditions. He again dismissed the suggestion it puts anybody’s entitlements at risk.

“Around 3,500 people left the scheme over the past 12 months and all have received their entitlements. This is because their entitlements and that of all members of the Defined Benefit Scheme remain guaranteed by legislation and will continue to be paid as they fall due.

“And there will be no change whatsoever for public servants with accumulation accounts. Queensland will continue to be in the very enviable position as the only fully-funded Defined Benefit Scheme of any state or territory in the country. In fact it will remain one of the few fully-funded public sector schemes of its kind anywhere in the world.”

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