Vic Labor’s Spending Blowout to Cost You in the Long Run

The Victorian government’s spending on public servants has erupted by more than a quarter since Labor came to office. The quickest-growing wages bill of any Australian government.

The rising wages bill, propelled by new hiring and union demands for higher pay, will increase Victoria’s government employee expenses by more than 45% of general revenue, an estimated $28.9 billion this year.

The Victorian government claims more public sector workers were needed to cater for a growing population, and added education workers, mental health professionals and police officers.

Nationwide analysis reveals that Victoria’s wages bill is almost on par with Queensland’s, where the public sector union has warned the official statistics are unreliable and fail to acknowledge those employed on commercial contracts or by labour hire firms.

Tony Makin, Griffith University economics professor, warned that the state governments are failing to subject their increased spending on wages to an appropriate cost benefit analysis.

Governments like to spend and the populations like the benefits and get the jobs, but they don’t recognise there is cost in taxes and future taxes in paying off the debt,’ said Professor Makin, a former federal public service economist.

Siphoning off workers?

Makin also pointed out that another cost of inflated bureaucracies is that they undermine growth by ‘siphoning off workers’ from the private sector, where they would potentially be more productive.

Professor Makin said all governments has fundamentally failed to examine the overlap of programs between the commonwealth and the states. This duplication of roles only further exacerbates the problem of growing government costs.

The state government budget stated that:

The increase in employee expenses also reflects changes in average remuneration levels consistent with enterprise bargaining agreements including teachers, police and health sector agreements.’  

One thing concerning former premier Jeff Kennett about the ‘very troubling’ wage bill was it could be difficult to pay off if the Australian economy slowed, as he told The Australian. He also hoped the new workers were employed in frontline positions — such as nursing and policing — rather than back office administration.

Backlash for labour hire practices

Queensland Labor has promised that public sector growth won’t surpass population growth. Yet this is accomplished by creating agencies to hire more workers on contract and via labour hire. The higher expenses reflected more staff, and a commitment to provide 2.5% wages growth for public sector workers.

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But in the midst of  a nationwide union campaign against labour hire practices, Together Queensland Union Secretary Alex Scott said there were potentially ‘several thousand’ Queensland public employees employed in this way.

‘We have been pushing for a number of years for the government to start being honest with the people of Queensland about the total number of people in the public service,

‘The current budget principle has meant that agencies have seen an explosion in the use of labour hire, which exhibits the worst form of employment practices just so they can hide the true scale of public service from the community.’

Last month, this prompted Queensland Premier Anastacia Palaszczuck to appoint public administration expert Peter Coaldrake to examine how data on public services employees is collected, stating:

As well as examining how that data is currently collected in Queensland, Professor Coaldrake will also look at the evolving nature of delivering services for Queenslanders into the future, 

That means ensuring that, as well as secure jobs, our frontline service workers have the skills and training they need in future.

While the percentages of fastest-growing wage bill came in at NSW (12%) South Australia (11%) Tasmania (14%) and Western Australia (8.6%).

With the federal public sector wage bill increased by 7.2%.

Leah Wallace

The Australian Tribune Editorial

The Australian Tribune Editorial

The Australian Tribune is an unorthodox news service. Your Australian Tribune editorial team deliver the unfiltered stories that could impact your daily life — political and economic stories you’re unlikely to get anywhere else. And we’re not afraid to step on some toes to do it. We are honest, conservative and never dull. We are an independent service, meaning we don’t answer to shareholders or outside advertisers. This helps avoid conflicts of interest that inhibit mainstream sources, which keeps our voice independent. The Australian Tribune is owned and operated by Port Phillip Publishing.
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