Auditor-General issues warning on rising Victorian public sector wages and government debt
The Andrews Government has been cautioned as the state’s public sector wages bill soars to $26.6 billion. The Auditor-General has warned that parts of Victoria’s infrastructure program may have to be changed or scrapped unless spending is reined in.
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The Andrews Government faces having to change or scrap parts of its infrastructure program if it cannot rein in the state’s $26.6 billion public sector wages bill, the Auditor-General has warned.
Employee expenses have soared by 40 per cent since Labor came to power five years ago and now make up a third of government spending after a string of generous workplace agreements with public servants.
The public sector watchdog has also cautioned that the government’s decision to ratchet up debt by 26.4 per cent in a year — taking total borrowings to $62.9 billion — could put at risk the “financial sustainability” of the Budget.
Amid concern among some Labor figures about the Budget, Auditor-General Andrew Greaves’s report said Victoria remained “financially well positioned” despite “a declining position” in the last financial year.
He raised concerns about the public sector wages bill, noting recent EBAs resulted in “significant increases” in spending.
“Continued growth in employee expenses will put pressure on the state’s operating position since, once in place, these expenses are difficult to reduce without reducing either the level or standard of services,” the report said.
Public sector wage expenses are expected to continue growing by an annual average of 3.7 per cent over the next four years.
Mr Greaves said the slowed growth rate was partially because of the transfer of 5700 public sector employees to private sector disability support service providers.
The government is also now trying to enforce a two per cent cap on wage rises.
Mr Greaves said the government was looking to achieve efficiencies in the public sector to offset wage rises, but that “achieving the target reductions and maintaining current service levels will be a challenge”.
“If expected efficiency gains are not all realised, government will need to find alternative funding to deliver against its budgeted service and infrastructure commitments, or refine, rephase or cease one or more of them,” he said.
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The report also questioned why there was not “comprehensive and consistently reported direct measures of public sector workforce productivity” to ensure wage rises were linked to improved quality and quantity of services delivered.
Treasurer Tim Pallas said the report “confirms Victoria’s solid financial position”.
“Victoria is not immune from the economic pressures felt across the world — but despite weaker national and international conditions, our economy remains strong,” Mr Pallas said.
“We’re delivering on our commitments while maintaining budget surpluses.”
But Shadow Treasurer Louise Staley said debt and public sector wages were out of control.
“It’s no wonder Daniel Andrews, Tim Pallas and Labor are trying to short-change our police and other vital workers: they are running out of money quickly,” she said.