How a week is not a long time in the public service

At last, some good news!   Daunted by the ballooning deficit and determined to end the age of entitlement, the government has cut ministerial salaries by 20 percent.  The bad news? It’s the government of Saudi Arabia. Low oil prices have even led it to cut housing and car allowances for members of the Shura Council by 15 percent.

No sign that this will happen here but why not? In its 2010 budget, Ireland cut public sector salaries by between 5 percent and 15 percent.  Payments to federal public servants will cost taxpayers more than $28 billion this financial year so a 10 percent cut could save more than $10 billion over the forward estimates.

The Department of Treasury’s top priorities are “promoting fiscal sustainability” and “increasing productivity and workforce participation” but rather than recommend a public sector pay cut, it gave its almost 850 employees the time off between Boxing Day and New Year without reducing their leave balance.  The Public Service Commission says the practice is widespread.  We’re not talking here about nurses or train drivers who are paid by state governments but federal departments – Treasury, Tax, Prime Minister and Cabinet, the Productivity Commission – run by people who know the deficit has already blown out, just since the election, from $37 billion to $41.5 billion.

So, the most expensive Christmas gift you gave this year is probably one you didn’t know you’d given.  The bill? Hard to calculate but paying Commonwealth public servants to do nothing for a week would cost around $600 million.   How do they get away with it? Federal public servants gazetted themselves an extra day of leave decades ago that private sector employees don’t get and some public service enterprise bargaining agreements traded off the days between Boxing Day and New Year in exchange for a few extra minutes the rest of the year.  Now, it seems, it’s just another public-sector perk.

The age of entitlement goes back a long way.  Former governor-general Sir Paul Hasluck worked for seven years as a diplomat from 1941 to 1947.    When he was discharged, he wrote, “The departmental officer who completed the formalities asked me why I had been such a fool as to use up some of my accumulated leave in America.  I need not have done so but could have enjoyed official idleness, for the obligation to pay my salary continued until my return to Australia irrespective of whether my services were being used.”  Showing why he was superior to those running our public service today, Hasluck wrote, “I had enjoyed myself so much that I was happier at having done it at my own expense.”

Apart from extra leave, salaries grow faster than in the private sector – at 2.3 percent over the last year for the public sector compared to 1.9 percent for the rest of us.   In the past three years that has been in the state public sector, where Labor governments gave big pay rises to public sector unions but over the last decade, the base salary of senior executives in the Commonwealth public service grew by more than 40 percent. For example, the median base salary of the Band 3 senior executives – those below heads of department – increased from $187,500 to $312,000 in that period.  Even that wasn’t enough. Together with generous superannuation, the average SES Band 3 in the Australian Public Service gets the use of a luxury motor vehicle and various other allowances making the average total remuneration and allowances $414,295 and the maximum $1,235,783.

The biggest pay increase was 2009. While many in the private sector, slugged by the global financial crisis, took leave without pay just to hang on to their job, federal public servants got a 6.4 percent pay rise and in the decade from 2006 and 2015, total reward grew by over 35 percent.

Unfortunately, our Prime Minister is unlikely to follow the lead of either Ireland or Saudi Arabia.  Instead, he’s created jobs for even more public servants announcing a new ‘independent’ parliamentary expenses authority.  Will this solve the problem?  Not if the Remuneration Tribunal is anything to go by.  That is the independent authority that presided over the current system of parliamentary entitlements and public service allowances since it was created in 1973.

We don’t need more taxpayer-funded bureaucrats to tell us whether public servants and parliamentarians are ripping us off, all we need is for all public-sector expenditure to be put on the internet as soon as possible, so that taxpayers can decide for themselves if the payments are justified. The only test these payments should pass is the sniff test.   At present, they are distinctly on the nose.

Rebecca Weisser is a Research Associate at the Centre for Independent Studies