Economists cast doubt on claims public servant cash bonus will boost economy

A massive bonus on the way for 200,000 public servants will drive Queensland further into debt, economists predict.

LABOR has been urged to rethink its multimillion-dollar public service bonus cash splash as economists cast doubt on the Palaszczuk Government’s claims the move will boost the economy.

The Government announced on Saturday it would be handing out a $1250 bonus to about 200,000 public servants — alongside a 2.5 per cent pay increase — as it seeks to close negotiations on multiple enterprise bargaining agreements.

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The one-off payment will be available for new agreements finalised between March 31, 2018 and March 30, 2021.

Treasurer Jackie Trad said the bonuses were designed to stimulate the economy.

Economists, however, say that is unlikely.

Nick Behrens, the director of Queensland Economic Advocacy Solutions, told The Courier-Mail he believed most public servants would save their money or use it to pay down debt.

He also warned the growing public service wages bill would only push the state further into debt.

Economist Nick Behrens. Picture: Jono Searle.

“If it is genuinely being done to benefit the Queensland economy I think it is only going to have limited success because people are in the mode of uncertainty, people are in the mode of saving for a rainy day,” Mr Behrens said.

“It’s only $250 million and that is a drop in the ocean in terms of the $326 billion Queensland economy.

“With public service numbers increasing, with the cost of employing those public servants increasing you are going to progressively see the operating surplus whittled down.

“What that will probably mean is there will be less infrastructure payments paid out of consolidated revenue and there will be a greater shift to debt.”

Adept Economics and former federal Treasury economist Gene Tunny described the stimulus excuse as a “weak” one.

“It is certainly going to be a significant addition to the income of those public servants and they will spend a fraction of it,’ he said.

“But if they are worried about a downturn then that is not really going to stop it happening. “That’s going to be quite minor in the scale of things.

“It really wouldn’t do much to stop a deteriorating economy in my view.”

CCIQ spokesman Dan Petrie also cast doubt on the claims the bonus would help boost the economy.

“It is very difficult for a small business person in Queensland to understand the reasoning behind this decision in an economic environment the government has acknowledge has further deteriorated over the last three months,” Mr Petrie said.

“Suggesting this bonus will spur economic activity runs counter to the Southern Cross Austereo Mood Monitor and Westpac Consumer Confidence report which shows that recipients of stimulus style cash payments tend to pay off debt or save it.”

The LNP continued to slam the Government over the bonus yesterday.

But Deputy Leader Tim Mander said the LNP would not ditch it should they win power at next year’s State Election.

“Unlike this government we are not in the business of ripping up contracts. If agreements have been made with good will, we will honour those commitments as well,” he said.