As grim as times may seem for federal public servants, their lot is about to worsen. It is now certain they will not receive a pay rise, as they might have reasonably hoped to, on July 1, when their existing wage agreements expire.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
In normal circumstances, the government would have released its pay bargaining framework late last year, giving the bureaucracy enough time to prepare for the upcoming negotiations. However, Employment Minister Eric Abetz published the framework only a week ago, ensuring that wage agreements covering about 110 agencies will be finalised well after the present ones end. Some negotiations may not be completed this year.
This wouldn't matter so much, but the Abbott government has stated explicitly that ''pay rises should apply prospectively unless exceptional circumstances apply''. In other words, after delaying negotiations with its public servants for half a year, the government has now effectively ruled out back pay. So, from July 1, federal bureaucrats' wages will stagnate while their costs of living continue to rise - in real terms, they will suffer a gradual pay cut. It's hardly fair, though nor are other aspects of the government's approach.
For example, the framework says any pay rises must be ''funded from within existing budgets, without the redirection of program funding''. Yet, at the same time, Treasurer Joe Hockey's mid-year budget review shows the government intends to cut its wage spending by $197 million in 2014-15.
The framework also says agencies can apply for pay rises if they are ''offset by genuine productivity gains''. However, this, too, offers staff a mostly false hope. The former Labor government cut billions of dollars of administrative spending and locked those savings away into future budgets. This means public servants are unable to point to the waste they have already managed to cut, particularly over the past two years, as examples of their efforts to improve productivity. Finding extra efficiencies on top of these will be tougher than ever, as unions arguing the case for public service pay rises are about to discover. Indeed, without a very large number of job losses, public servants are more likely to cop a pay cut after July 1 than to receive a raise.
There may be a case, if not an entirely compelling one, for steep cuts to federal spending. For example, the government has run six consecutive deficits, even though its stimulus plan wound up several years ago. Prima facie, this might be read as a sign of a government that is overspending. However, the available evidence suggests otherwise.
Most disinterested observers say the Australia government is low taxing rather than big spending. The Organisation for Economic Co-operation and Development, for example, regularly lauds the effectiveness and efficiency of our governments compared with those of other developed nations. In relative terms, the OECD says Australia's federal bureaucracy is far from bloated, nor does our government have a great level of public debt. However, the International Monetary Fund has warned that Australia has one of the developed world's highest levels of tax spending: that is, our government loses vast amounts of money because it grants so many tax exemptions and concessions.
The Coalition's pre-election rhetoric suggested Australia needed urgently to restore the federal budget surplus. Its post-election behaviour has suggested otherwise. The rushed commission of audit, whose findings will shape the Abbott government's first budget in May, ignored entirely the matter of tax exemptions, instead focusing solely on spending. The government says it will eventually examine the tax question, but via a separate, two-year inquiry and white paper. The urgency to post a surplus has evaporated.
In the meantime, it seems the government will demonstrate its economic rectitude by attacking the bureaucracy. Public servants can expect not only real wage cuts but the loss of benefits, too. The question now is the extent to which they are willing to fight for their conditions. But the government must also ask how willing it is to discourage its own workers - especially the bright ones with prospects elsewhere - from continuing to serve it.