Source: APS Remuneration report 2012.
For many years, this column has agitated about arrangements for fixing pay and conditions in the Australian Public Service. Well, someone should, because the set-up has been irrational and fraudulent, damaging to proper management, and vastly more costly than the viable and desirable alternative. It's been said that industrial relations is essentially a game designed to allow participants to maintain their relative positions but current practices in the APS do not even reach this low standard.
How did things get into such an awful state?
The bigger the mess, the harder it is to tidy, but that's no excuse for not trying.
In the early 1990s, the Keating government devolved responsibility for pay-fixing to departments and agencies essentially for two reasons.
First, to use the APS as an example of enterprise bargaining for the rest of the community. Paul Keating believed he was introducing the country to new ways of using the industrial relations system to stimulate productivity. He wasn't, as anyone with the faintest knowledge of IR bargaining in the APS in the 1960s would appreciate, but no matter; Keating has not been the only delusional Australian politician, though he often seemed to be better at it. The point is his government thought its promotion of enterprise bargaining in the early 1990s would be aided if pay negotiations in the APS were organised on a department-agency basis.
Second, if individual agencies were to be responsible for fixing pay, it was thought they might be able to negotiate improvements that were otherwise impossible in central negotiations providing uniform adjustments across the APS as a whole.
There was something in these reasons, though there was also an appreciation at the time that they could be stretched too far. For example, linking pay increases to productivity gains could reward the inefficient - that is, those with restrictive work practices they could bargain away. Further, differential rates of pay could give rise to management inflexibilities in terms of staff wishing to move from one agency to another, or in relocating functions between agencies as a result of machinery-of-government changes.
Note: The figures above are the highest amounts paid to individuals last year.
Therefore, the Keating system included a mechanism (known as ''the fold-back'') for evening up rates of pay; it was probably the most arcane device in Australian public administration, and that's saying something. Moreover, there was an unspoken understanding at the time that, after a couple of pay rounds, the system would revert to centralised pay negotiations and that the APS would be treated as it always had been: a unified organisation in which the enterprise was regarded as the service as a whole.
That expectation came a cropper, however, when the Keating government was defeated by John Howard's Coalition in the baseball bat election in 1996, after which Peter Reith became the IR minister and minister for the public service. Reith put ''the fold-back'' in the rubbish bin and extended the Keating system so that negotiations could cover staff benefits as well as pay.
The Rudd and Gillard governments have done little to tidy up the IR mess in the APS they inherited. The 2010 Blueprint for the Reform of Australian Government Administration had a ''vision'' of an ''APS unified by an enterprise agreement bargaining arrangement that embeds greater consistency in wages, terms and conditions''. While some small steps have been taken - for example, the imposition of an upper limit on pay increases, though with an out clause - this ''vision'' remains unrealised.
And so, on remuneration, the APS is left in the predicament roughly summarised in the graph and table table to the left. Sure, care should be taken in interpreting it: for example, to illustrate dispersion, the non-salary payments are maximums; the averages, in most cases, are much lower. Nevertheless, this is an ugly sight that should surprise no one because, for more than 15 years, the APS has had to get by without a remuneration policy in any real sense. The system has been rudderless (no pun intended) and such is the result.
So what dreary conclusions can be drawn?
First, while the classification of positions is not an exact science and jobs at any one level will usually fit within a salary band, the degree of overlap now evident between salary ranges implies that the classification system is not worth the paper it's written on. That is to say, the lynchpin regulating the proper organisation of work in the APS has lost its integrity and usefulness.
Second, the promotion and transfer systems have been undermined. For example, would the APS5 officer earning a base salary of $101,151 be much interested in a promotion to the APS6 position at $59,633? So much for the idea of the ''career service'' in whatever generous sense that term might be interpreted. Staff wishing to know where their agency stands in the salary pecking order could consult an excellent tool below developed by The Canberra Times.
Third, while the maximum performance bonus payments at the EL2, SES2 and SES3 levels look like typographical errors, the Public Service Commission says they are amounts reported to have been paid in 2012. It would be nice to know what the recipients did to deserve such largesse, which would not be out of place in a generous organisation in the financial services sector and would appear to exceed that paid by ACTEW Water to its chief executive in the recent past. Those payments must be the envy of one APS6 officer, whose assessment resulted in an annual bonus of $9, about enough for a McDonald's double quarter pounder with cheese but without the trimmings. And for those who might have thought performance bonuses had largely rotted on the vine, about 21,000 staff got one in 2012, including about 800 senior executives.
It might be possible to find some redemption if this shambles had been brought about in a good cause by legitimate means; that's not so. The current remuneration policy pretends that pay increases will be ''offset by genuine, quantifiable productivity improvements''. There is no evidence this is so and the Public Service Commission doesn't collect relevant information to establish the working of the policy it administers. Further, the system is many times more expensive to operate than one in which pay and major conditions are settled by a single negotiation that could properly take into account service-wide matters. In short, the policy is a costly con and no information is available that would give comfort to taxpayers that APS remuneration is reasonably placed with rates paid by other employers.
But is that a faint light at the end of the tunnel? The Canberra Times reported last month that the commission ''wants a 'central agreement' to govern 'core conditions' believed to cover wages, working hours, redundancy and redeployment provisions'' and this was ''revealed at a meeting'' between the commission and unions.
The parties are not giving much away. The Public Service Commissioner, Stephen Sedgwick, was reported as saying it was important to give agency heads some flexibility to negotiate their own productivity and pay agreements with staff. Well, that's been going on for many years now and it has produced a frightful, damaging mess in which productivity gains cannot be seen.
The unions seem to be at cross purposes. The Community and Public Sector Union likes the idea of a single, APS-wide agreement but its national secretary, National Flood, says its ''first priority'' is ''preventing job losses''.
The Australian Service Union's Taxation Office branch secretary, Jeff Lapidos, apparently reckons a central bargaining regime is bad news for his members, who apparently have higher wages and shorter hours than other public servants. He said: ''The people who are paid the best and who have the best conditions should be the ones who deliver the best productivity.'' Any evidence that ATO staff are more productive that their counterparts in other parts of the public service is neither apparent nor believable. If Tax Office staff are now advantaged, that is more likely to relate to their industrial clout.
But, in some ways, union apprehensions are central to cleaning out the stables through a centrally negotiated agreement, because those who have enjoyed higher remuneration will need to slow down a little while those who have been getting less catch up.
The bigger the mess, the harder it is to tidy, but that's no excuse for not trying. The APS has suffered more than enough under the current regime, in which rich departments with powerful unions are rewarded and the rest are left to lag.
For the moment, however, what to do about the next round of enterprise bargaining in the APS has probably been put on the shelf until after the election.
Whatever government the wise electors choose will be on the hunt for savings. The favourite, Tony Abbott's Coalition, conjures up prospects of mammoth savings from cutting waste. If it gets up, it will most likely find that, worn down by increasingly large efficiency dividends, there's not a lot of blubber in agency operating budgets, with one exception: the extraordinary waste now to be found in the current devolved arrangements for fixing pay and conditions for staff. More than 100 agencies all doing the same thing when one could do it for them all; the rich getting richer and the poor getting poorer; the management inflexibilities inherent in different agencies paying different rewards for jobs classified at the same level; the classification competition the system appears to have encouraged, with many more positions now at the higher levels - all this and more constructed on a foundation of claimed productivity gains for which there is no evidence.
So, Abbott, if, as seems likely, you are to be the supreme leader, a single enterprise agreement for the entire public service gives you the chance to scrape real waste from operating costs. You never know: you might thereby be able to go easier on staff cuts and that could be handy, because in government you'll need all the help you can get. After all, it was the government of which you were a member that can take prime responsibility for the current shambles.
Paddy Gourley is a former senior public servant.