policy

Jul 2, 2012

Introducing the Qld Treasurer

Introducing Tim Nicholls, the man who doesn't realise he's the Treasurer

Possum Comitatus — Editor of Pollytics

Possum Comitatus

Editor of Pollytics

New governments are always the last to realise that the only thing new about governance and public policy happens to be them. The test of any new government is how long it takes for that realisation to occur.

In Queensland, we’ve just completed the first 100 days of the Newman Government, otherwise known as Campbell Newman’s 100 day magical mystery tour – a sort of prolonged orientation week for new front benchers as they attend lots of events, go to a lot of meetings and where the public service tries their best to make them realise that they’re actually running the show now, and that it’s time for them to get their shit together.

A few of Ministers have surprised people – adapting to the realities of government much quicker than many thought they would. Some have taken to it like naturals.

Others however, too many in fact, haven’t quite figured it all out yet – others still, don’t seem to be able to bring themselves to even start acting like grownups.

Let me introduce you to Tim Nicholls – Tim doesn’t realise that he’s actually the Queensland Treasurer. He knows he is something Treasurerish, with his better office, people actually answering his calls, journalists actually attending his press conferences. He gets to attend swankier events and has a substantially larger hospitality budget – but he still doesn’t realise that he’s actually the Treasurer.

You can tell, as he still behaves as if he were in opposition – a place in Qld where  it has historically been considered acceptable practice to just make things up as required. The transition from ad hoc political sloganeer to serious political institution isn’t going well for Mr Nicholls.

The alleged Treasurer recently wrote an article for the Brisbane Times – it’s well worth pulling it apart to highlight the lazy nonsense that’s starting to pervade what should be the serious side of Qld politics.

It begins:

Temporary contract workers in the public service were “cruelly strung along” by the former government, argues Treasurer Tim Nicholls.

The Newman government’s position on the size of the public sector is quite clear – our overriding principle is to preserve as many jobs as possible.

This government has both a responsibility and a mandate to pay down Labor’s debt.

It is a responsibility we all share.

And it is with that thought in mind that I ask members of the public sector to carefully consider demands for higher wages.

Let us then carefully consider these demands – but more importantly,  a big bunch of public policy issues that accompany them – for at least then, there will be exactly one of us that has decided to do so.

It’s a question of high wage growth versus job cuts.

By turning down wage offers that are more than fair, union members will be jeopardising not only their colleagues’ jobs but also the state’s future prosperity.

The “wage offers” the alleged Treasurer is talking about are actually based on Tim Nicholls and Campbell Newman making an assumption that average annual inflation across the next three years – the life of the coming agreement – will be 1.6%.

No – that’s not a typo.

Not for this dynamic duo, that awkward reality where the Reserve Bank of Australia runs an inflation targeting regime designed to keep inflation between a 2% and 3% band over the medium and long term.  To put this piece of ridiculous economic piffle into some context, let’s look at the most recent RBA Statement on Monetary Policy and the median inflation expectations contained within it (pages 64 and 67)

They have inflation forecasts 60 to 90 basis points lower than everyone else! If Nicholls wants to give real wage cuts, he should simply be honest about it. But as we’ll see, honesty isn’t often the best policy for the alleged Treasurer.

The Queensland government coffers are empty. State debt is heading for $100 billion. Unions can thank their Labor ‘mates’ for that.

Eleventy bazillion in fact – but that’s another laugh for another time. The only thing more consistent about new governments than rampaging egos are the discovery of magical budget black holes.

So when unions demand more money for their members it stands to reason expenses must be reduced elsewhere.

Rationalising the public service is not a task we relish. Nor do we embark on it lightly or frivolously.

There are many hardworking and dedicated public servants who have been let down by a Labor government that made short-term decisions for their own political benefit.

The Commission of Audit Interim Report found that in the past decade the size of the Queensland public service was allowed to grow by an unsustainable 41 per cent. It has become too top-heavy. Had the public service grown at the same rate as population, we’d have 18,500 fewer public servants, and expenses would be $1.5 billion lower.

 

It’s one of those “if my aunty had a willy, she’d be my uncle” things.

Let’s have a look at these figures – they’re quite enlightening and expose a pretty poor understanding of Qld public policy history. All figures are available from the Qld Public Service Commission’s annual reports from 2001 to 2011. For 2012 numbers, I’m using the 2012 March Quarter update on the same site.

To start with, here’s Qld public service numbers by the key departments – Health, Police, Education and Communities (which is where child safety and disability services reside) since 2001. (click to expand all these charts)

Now, let’s combine those together and call it HPEC and chart it with “the rest of the public service” which we’ll call “Other”.

That’s the entire Qld public service in that above chart.

Now, let’s look at that last chart, but where HPEC and “Others” (the rest of the public service) are done as proportions of the Qld population.

Now the story starts to be painted. The raw growth in the Qld public sector total numbers came from Health, Education, Communities and Police. The relative growth came from Health, Police and Communities – which we can see here:

While the total public service grew by 38% compared to population growth of 25%, Health, Police and Communities were where the actual growth came from – while Education and the rest of the public service grew at a slower rate than population growth. Education and the rest of public service became more efficient over that time – much more efficient, with education delivering an additional year of schooling, and the rest of the public service implementing the largest legislative and policy agenda that Qld had seen over any decade period

The reason health grew is simple – it was a response to the Qld Health crisis, which you may remember from such classic hits as Dr Death and Bundaberg Hospital. What happened for those uninitiated in the ways and means of Qld’s institutional killing and maiming, the health and hospital system was understaffed and so poorly organised to the point where basic accountability and transparency systems ceased to function, or in many cases, ceased to effectively exist at all. It wasn’t just Bundaberg hospital either – Bundaberg just happened to be the canary in the coalmine. The problems found at Bundaberg were also found across the entire Qld hospital system, but mostly to a lesser degree of magnitude… lesser but growing.

We were on the verge of having a whole lot of Bundaberg hospitals – so the Health Action Plan was created, which attempted to deal with the situation. As a result of more doctors, nurses and health professionals being brought into the system (and the construction of a much more accountable system along with it), the proportion of front line workers in Health jumped from around the 81% mark in 2001 to 86% today. Similarly, over that period, the case load of hospitals has also increased significantly.

With Police growth – that’s pretty self explanatory.

Communities on the other hand has been largely driven by child safety and child protection issues rising from what was the appalling state of Qld’s capabilities in those regards. So much so, that Newman himself has just initiated a major inquiry into the child protection system. The irony being that it will recommend more staff.

So that’s why, policy wise, we witnessed the growth we did in the Qld public service – ostensibly to deal with a health and child protection crisis, and adding more police.

When Tim Nicholls says: “Had the public service grown at the same rate as population, we’d have 18,500 fewer public servants, and expenses would be $1.5 billion lower.”

Let’s look at what that would mean:

I’m using more updated numbers than Nicholls – March quarter 2012 figures. What we see is that if the public service grew at the same rate as the Qld population, we’d have 17,725 fewer people in Health, 3,594 fewer in Communities and 1,002 less in Police.  Ironically, we’d also have 1,346 more people in Education and 418 more in the rest of the public service – but let’s not go there. 86% of the increase over and above population growth came directly from Health.

To give an idea of what’s involved here with the alleged Treasurer’s ideal public service numbers – i.e. a position he’s plucked straight from his posterior with little to no thought at all –  if we look at the health action plan and it’s follow through (small pdf file), it made the number of front line health workers 85.8% as of June last year (a simple calculation from that link – 58,280 of the 69,221 health employees were front line)

Even if we assume it’s down to 85% (when there’s absolutely no reason to, just being generous to Tim as he appears to need all the generosity he can get), that means there’s only 10,300 odd non-frontline health staff, and he reckons there’s 17,725 too many.

According to the alleged Treasurer, he’s going to need to cut all non-front line staff (don’t ask who handles Hospital logistics) and still needs to cut over 7,000 front line staff on top, just to get back to his fantasy ideal of the public service in Health alone.

Back to the days of Bundaberg – on steroids – and more killing and maiming. The problem the alleged Treasurer faces is that his public service numbers don’t stack up to anyone that knows anything about Qld public policy, or how we got to where we are.

Tim Nicholls continues:

Almost half the state’s revenue this financial year will be spent paying public servants’ wages and superannuation.

A fascinating statistic – although one that loses a bit of its clout if you mention that this actually happens every year. State governments supply public services, public services provided by actual people called public servants – you don’t get one without the other. It can be a tough concept to get your noggin around.

If we track employee expenses and revenue from the General Government Sector Operating Statement of budgets going back to 2003/04,  we get a pretty unexciting chart.

 

 Weekly earnings of Queensland public sector workers have increased by 16.7 per cent in the past decade, compared to 12.7 nationally.

If wages have increased by 16.7% in a decade, that would be very bad news indeed – since inflation over the period from 2001 to 2011 was actually 33.1% (Try it yourself with the RBA inflation calculator).  No wonder Tim is offering real wage cuts as wage offers, if he reckons a 16% real wage cut over a decade was absolutely fantastic stuff.

If you’re confused about now, the alleged Treasurer probably meant “real wage” rises – although who really knows. If we ever get to the point where analysing what Tim Nicholls “actually means” becomes a necessity on any given economic topic, it’s probably safe to say that we’ve already lost.

Meanwhile, we can jump over to the Australian Bureau of Statistics and have a look ourselves.

The period the alleged Treasurer is concerned with here spans the 2000/2001 through to 2010/11 financial years.  The first release of ABS 6302.2 after July 1st of each year comes in August, so that’s the data we’ll use here.

As you can see – the Qld public sector average weekly earnings (Full time, adult, ordinary time earnings) grew 57.7% over the period compared to 54.3% growth for the national public sector average. But what you can also see is that Qld public sector wages grew from being 95.3% of the national public sector average in August 2001, to be 97.4% of the public sector national average in August 2011.

Similarly, Qld private sector wages grew 70.4% over the period, compared to 60.4% nationally – and changed from being 91.9% of the average national private sector wage in 2001 to being 97.6% in 2011

In other words, Qld public sector wages grew faster than the national public sector average, but grew slower than Qld and Australian private sector wages and are still less than the national public sector average.

The reason for this is pretty clear – Qld was a low skill, low wage economy for most of its existence and has only recently started to catch up to the rest of Australia. The private sector in Qld was particularly lower skilled in terms of education and training compared to the broader Australian private sector, and as the skill level of the Qld labour market increased, and as the economy itself increased in sophistication and value production,  we witnessed substantially higher private sector wage increases than the national average. Effectively the skill/wage gap closed between Qld and the rest of the economy as Qld became better educated and developed more sophisticated vocational skill sets to match a much more sophisticated economy. You can also add to that the resources boom, which added higher value production to the Qld private sector economy.

The public sector in Qld, however, already had a higher level of education and training compared to the Qld private sector, and the skills/wage gap between the Qld and National public sectors was much smaller to begin with.

Getting back to the remarks from the alleged Treasurer – it is true that Qld public sector wages grew faster than the national public sector average. They grew from being 95.3% of the national average in 2001 to being 97.4% of the national average in 2011 –  reflecting a state wide pattern of higher than national wages growth as we closed the gap between us and the rest of Australia. But while we closed the gap, we are still below the national average.

While wage increases for public servants have been markedly higher than inflation in recent years, many small business owners and private sector employees have struggled to make ends meet. They have been forced to pay rising taxes, fees and charges, without receiving any increase in their take home pay.

 

Ahem

  

 

We’ll do real wages in a bit.

Many private companies during the global financial crisis made the tough decision to freeze employee wages and recruitment. The employees at these companies may not have liked having their wages frozen, but accepted it was better than the alternative of losing their jobs. Even before the economic slowdown, real pay rises (above inflation) were only offered in exchange for productivity gains or increased responsibility.

Meanwhile, at ABS 6302.2 (where we were just at) and ABS 6401.0 (Consumer Price Index), we can combine those to give us some comparable real wage increases by sector – Tim’s “real pay rises (above inflation)”.

As we’ve already seen, Qld private sector wages over the decade grew at a much faster rate than Qld public sector wages – and everyone experienced the same inflation rate. But let’s look at the period covering the global financial crisis – from 2008 through to today. You never know, Tim may have actually got something right.

Real wage rises (wage rises adjusting for inflation) since the beginning of 2008 have averaged 2.8% per year for the Qld private sector and 1.9% per year for the Qld public sector.

While private sector real wage growth did freeze for a couple of quarters, it recovered quickly, and over the entire financial crisis has outstripped public sector wage growth.

When the private sector was hit by the GFC, they reduced output as a result of collapsing demand. As a consequence of that reduced output, they had a few quarters of wage restraint.

The output of the public service is public services – it isn’t an abstract concept – it’s health, police, fire fighters, child protection, education etc. The demand for public services didn’t collapse, isn’t collapsing, and won’t collapse over the forward estimates. Far from it, demand for Qld public services has, and is continuing to increase – in some areas increasing dramatically.

Using the alleged Treasurer’s own argument, if he wants a wage freeze because of collapsed output, as occurred in the private sector during the GFC, then what public services does he intend to reduce the output of?

Does he even know? Does he even understand the question?

During recent enterprise bargaining agreement negotiations we offered fair and reasonable pay increases to public servants who are among the best paid in Australia.

Well, yes, as long as “among the best paid” = “below the national average”.

From what we’ve seen so far, I think we can safely suggest that Tim is among the best economic minds in Australia.

Anyway – the article goes on and on. If you really want to punch yourself in the face and read the rest of it, you can continue it over here.

Unfortunately, this is indicative of the type of vacuous piffle we’re getting from the Newman government across a wide range of policy areas, where Ministers – too many Ministers – are still acting as if they’re in opposition and regularly producing all sorts of inaccurate and superficial  rubbish about the big policy issues that they are now supposed to own. They aren’t getting called on it either, as the Labor opposition are one of the saddest telephone booths of people you’ll ever lay eyes on, and the media is getting hollowed out to the point where there aren’t enough hours in a journo’s day to be across the detail involved on any particular policy issue. Too many in the Newman Ministry, including the alleged Treasurer, are effectively running a Baffle Them With Bullshit strategy.

The difference between being in government and being in Opposition is that the former requires you to be at least marginally acquainted with the reality based community. Unlike Opposition, government doesn’t start and end with political hackery – there is a more important job involved, that of policy and governance.

And that requires you to at least be partially across your brief.

God help them when the inevitable policy crisis lands in their lap, where the effectiveness of its management will be defined by their actual policy capabilities and policy knowledge. From what we’re seeing so far, there’s a lot of childish pretenders hanging around.

So…..

Dear Tim Nicholls, if you want to actually be the Treasurer, then start acting like it. Shit or get off the pot.

Disclaimer: When I take off my possum suit, I work for Qld’s public sector union – which may explain why I’m across the details involved here.  These views are my own  – however widely they may or may not happen to be shared by others.

 

 

 

(Visited 65 times, 1 visits today)

33 comments

Join the conversation

The Crikey comment section is members-only content. Please login or sign up for a FREE trial to engage in the commentary.

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details

Sending...