States shrink at culling bloated bureaucracy
Tomorrow's Queensland budget will provide a true litmus test of the preparedness of state Coalition governments across the eastern seaboard to reduce the size of government.
With revenue growth weak, budgets in deficit or wafer-thin surplus, and as public sector debts continue to mount, cutting government spending is essential to help restore sustainable state public finances.
Since public sector employment costs average about 44 per cent of general government sector operating budgets in the three big states, governments should reduce their workforces as part of meaningful fiscal consolidation strategies.
But the quantum of the public service cuts that the O'Farrell, Baillieu and Newman governments have announced or implemented have been, to put it kindly, meek and mild at best.
In NSW there has been speculation the government will cut up to a further 10,000 jobs, following its announcement last year to reduce its employment by 5000 people.
Queensland has already reduced its public sector by about 5000 jobs, with the budget likely to shed up to 14,000 jobs.
In Victoria, the Baillieu government has announced two rounds of public service reductions totalling about 4000 positions.
While these figures may seem large in isolation, in the context of total public sector employment these reductions represent a drop in the ocean.
According to the ABS, excluding the tertiary education sector, there were over one million state government employees in NSW, Victoria and Queensland as at June 2011.
In effect the job reductions already announced or implemented by coalition governments in the three big states roughly amount to less than two per cent of total state government employment.
And a considerable proportion of the redundancies so far have been either voluntary redundancies or retrenchments of contract workers whose terms were about to expire in any case.
Apart from the actual numbers of employees engaged, salaries and benefits paid will also have a bearing on the ability of state governments to contain their costs.
The O'Farrell government has been particularly active in this area, with its application to the state's Industrial Relations Commission to limit public servants' entitlements following its decision last year to legislate a cap on wages growth of 2.5 per cent.
These reforms are a commendable first step to ensuring that public sector entitlements are not out of line with underlying economic conditions or community expectations, and should be considered by other states.
But as the Baillieu government has discovered through its pay negotiations with police and nurses, alternatively bowing to public sector union demands to be the "best paid in the country" only delivers unnecessary political and budgetary pains.
Clearly the public sector unions have marshalled a well-organised campaign opposing any reductions in public sector employment or entitlement limitations, regardless of the union membership status of affected employees or the state of the budget.
The conventional wisdom is that this campaign is wearing away the political shine of the new kids on the state political block, especially in Queensland where the LNP's opinion poll standings have fallen away considerably over three months.
While all three governments when in opposition rightly made the budgetary recklessness of their predecessors an election campaign priority, they failed to take the next step, then and now, to outline why future public sector employment reductions are necessary.
There was no explanation that state bureaucrats are funded by state taxes, or perhaps even by taxpayers in other states through GST redistributions, and that these adversely affect economic activity and private sector growth.
No mention was made of the fact that fewer skilled workers are available to the private sector, where they could be used more productively, when public sector employment expands as it did over the past decade in NSW, Victoria and Queensland by 290,600 people.
There was silence about the way in which extra public policy bureaucrats advising or enforcing taxes and regulations accentuate cost pressures upon private sector businesses and individuals.
Nor did the Coalition parties mention that frontline staff often deliver sub-optimal services, in areas such as education, health care or welfare services, that could be delivered more efficiently by the private sector.
In fact, they concurred with then Labor governments that frontline staff should be preserved as a protected species shielded from the winds of reform. It is in this deafening silence about the need for public service attrition that public sector unions, and others on the big-government gravy train, fill the vacuum by arguing for the disreputable position that government employment should be either set in stone or even expanded.
Having successfully wagged the dog of state Labor governments for the best part of a decade to fulfil their socialistic objective of public sector expansion, public sector unions are now waging a rearguard, conservative campaign to protect their membership base.
With Coalition governments finding themselves under intense pressure to pull back from trimming the public service to more reasonable proportions, the big question is will they concede to the statist agenda of the public sector unions?
The record so far has been rather uninspiring, but at least the first Newman budget should provide some vital clues as to whether democratically elected state governments have finally acquired an appetite for serious small-government reform.