We can’t delay public service cuts any longer if we want to get out of this economic crisis

WAGES in the public service must fall in line with those in the private sector. Otherwise we’ll never get out of this economic crisis, writes MATT CUNNINGHAM

THE coronavirus crisis has accentuated a problem that’s been growing in the Northern Territory.

There are now two types of workers here; those in the private sector, and those who belong to the public service.

If you’re a worker in the private sector right now, there’s a good chance you’re worried about your job.

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Your hours might have already been reduced. Or you might even have been stood down.

If you’re lucky enough to still have a job, then you probably haven’t seen a pay rise in years, and you’re certainly not expecting one now.

If however, you’re one of the 35,000-or-so people employed by the NT public service – more than 21,000 full-time equivalent positions and still growing at last count, despite promises of caps and freezes – then you won’t need to worry.

Your job is safe, you can enjoy six weeks of annual leave, possibly a housing allowance – even if you’re living in a large town or city – and expect a decent pay rise come August.

Chief Minister Michael Gunner doesn’t have any plans for public service pay freezes. But perhaps he should. Picture: Che Chorley

This imbalance wasn’t lost on one public servant who texted in to the Chief Minister’s talkback on Mix FM on Monday, suggesting a pay freeze might be a good idea this year.

Not surprisingly, Michael Gunner didn’t seem all that keen. “It’s not part of my active plans,” he said.

And with an election due about the same time as that scheduled pay increase, it’s a fair bet it won’t become part of his plans at any time in the next four months.

But at some stage a government will have to address this issue.

The growing public service – and its growing wages – has been sending the Territory broke.

The NT Government’s own independent report into budget repair noted the NTPS was the biggest drain on the government’s coffers.

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The government implemented a recommendation to freeze the salaries of those on executive contracts (all worth more than $217,000 a year).

But it’s so-far shied away from the biggest cost-saving measure put forward by report author John Langoulant.

He recommended all public service pay rises be capped at $1000 across the board.

It’s a reasonable recommendation.

It ensures a cleaner on $40,000 would still get a 2.5 per cent pay rise, while a bureaucrat earning $100,000 would get a rise of one per cent.

The savings to the budget would be significant.

In fact, last November Treasurer Nicole Manison said these savings had already been factored into the Budget over the forward estimates, even though the government hasn’t implemented the measure.

But as we look at plans for a post-coronavirus recovery, the biggest problem with the public service might not be the drain it places on the budget, but the impediments it puts on private enterprise.

Treasurer Nicole Manison said, in November, savingsaddresses the media with updates on parliament, elections and COVID 19. Picture: Che Chorley

It’s a point Langoulant notes at some length in his pre-coronavirus report. While public and private wages traditionally grew at similar rates, there has been a large and growing discrepancy since the economic downturn in about 2015.

The growing wages and generous entitlements in the public sector make it harder for the private sector to compete when they’re trying to recruit and retain staff.

The government is pricing them out of the market

If this was a problem before coronavirus, it will only be worse as we try to grow the economy out the other side.

Interestingly, back in 2010 we had the same problem in reverse. A booming private sector made it hard for the public service to retain staff, so two new, highly-paid, permanent public sector positions were introduced.

Reforms are now required to deal the private sector back into the game.

As Langoulant notes: “Addressing the emerging gap between public and private sector wages in the Territory will take time given the majority of NTPS enterprise agreements are locked in for the next three years. Nonetheless, restraining NTPS wages growth could contribute significantly to budget repair over the medium term and lessen the need to reduce staff numbers. It would also ease the burden placed on Territory businesses to compete with the NTPS’s more generous wages and conditions.”

Labor is no doubt hoping it can avoid this issue before polling day.

But it will be top of the agenda for whoever wins the election.

Come August 2021 the enterprise bargaining agreement ends for more than 11,000 non-frontline public servants.

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By then, a flat $1000 pay rise might seem like a generous offer.

They’d be well advised to accept it, because if the government can’t reduce its employee costs, its only option will be to cut staff.

And having the spectre of unemployment hanging over your head is never any fun.

Just ask someone in the private sector.