NSW Treasurer Mike Baird has declared he has ”tamed the beast” of spiralling expenses in the state by cutting thousands of jobs and capping wage rises for public servants during the first two years of the O’Farrell government.
As Mr Baird prepares to hand down his third budget on Tuesday, figures released to Fairfax Media reveal the size of the public service has fallen for the first time in more than a decade, with more than 5200 jobs shed between last June and the end of March.
The number of public servants has fallen from 332,555 last year to 327,330 – a cut of 1.57 per cent – representing the first year-on-year fall since 2002. Final numbers will be available in June.
There have been 4608 redundancies since the government’s first budget in 2011 when it announced its target of cutting 5000 jobs by 2014-15.Advertisement
The job cuts, a 2.5 per cent cap on public service wage rises introduced in 2011, a labour expense cap imposed last year and the scrapping of the previous government’s ”no forced redundancies” policy have cut employee-related expenses growth in half.
”Expense growth was out of control under Labor but we have demonstrated that we have managed to tame the beast,” Mr Baird said. “In an effort to do what families all over NSW do, we have lived within our means. Not only has the growth in overall public sector numbers been reversed, but within those smaller totals we have increased the number of those on the frontline – nurses, police and teachers”.
Last year Mr Baird introduced the Fiscal Responsibility Act requiring the government to keep annual cost growth to below average long-term revenue growth. Long-term revenue growth is forecast at 6.5 per cent and the budget papers will show total expenses growth for 2012-13 will be 2.7 per cent.
Expenses are forecast to rise by 7.5 per cent in 2013-14 but the government will put this down to an accounting change introduced this year requiring the state to alter how interest on superannuation assets is calculated.
The expense growth figure for 2014-15 is forecast at 2.8 per cent. The budget will show that four-year average growth in employee-related expenses has fallen from 6.5 per cent in 2010-11 to 3.7 per cent in 2013-14 and is forecast to reach 2.8 per cent in 2015-16.
The government argues that because it has been able to hire 509 nurses, 1621 school teachers and is on track to achieve the authorised target of 16,665 police by August 2015 the cuts have come from the ”back office”.
Mr Baird indicated that, despite the reduction in costs, more cuts might be required. ”It’s far too early to take our foot of the pedal,” he said. ”We must carry on the work in past years of cutting back waste and inefficiency and improving the focus of government programs.” Mr Baird said aligning costs with revenue meant the government could “give ourselves the best chance to improve services, invest in vital infrastructure, and support the vulnerable”.
But the secretary of Unions NSW, Mark Lennon, said Mr Baird ”should not gloat about sacking public sector workers when fire stations are temporarily closing down, hospital beds are being removed and ambulance response times are blowing out”.
”It’s about time this government dispensed with its simplistic distinction between frontline public sector workers and the people who support them. Crude cost cutting just creates a deep social deficit.”