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Blowout in Public Sector wages bill

Cindy Tonkin - November 23, 2009

Andrew Burrell in today’s AFR reports on the $7.6bn blowout in all State Governments’ spending from 1 July 2008 to 1 July 2009 (no link, behind sub firewall).

His claim is that this was mainly due to blowouts in PS wages costs, by 7.5% in NSW, for example. This blowout was in the face of an economic downturn, but with rising revenues, as federal grants meant that revenues actually rose for some states. Of course, their expenses grew by a larger percentage – mostly due to wages.

I’m doing some research on public finances and public sector staffing arrangements – my postgrad economics meshes nicely with our business – and will be publishing early next year, so this really fascinates me. I know, it’s kinda sad, but it gives us a great base to understand the pressures on the public sector.

What all of this reveals is the importance of actually following through on the standard government promise of limiting expenditure growth or even reducing it. Which hasn’t happened since the Greiner 1990s.

Which suggests the public sector – NSW and WA in particular – have got some serious reviews of process, work practice and staffing models in their future.

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