Public sector cuts will hurt in times of crisis

Public service must be ready for the unexpected, writes James Whelan.

IN announcing this week’s budget, NSW Treasurer Mike Baird promised to retrench 5000 public servants. This comes as no surprise.

Premier Barry O’Farrell communicated his intentions before the state election: we could expect to see fewer ‘‘back room bureaucrats’’ but rest assured that this wouldn’t mean fewer public servants to deliver ‘‘frontline’’ services like health, education and policing.

In developing this platform, the Premier took advice from John Howard’s adviser Max ‘‘the axe’’ Moore-Wilton, who described the NSW public service as “a mess” and urged “real surgery”.

The NSW Coalition is following a well-worn Liberal path. In 2007, then opposition leader Peter Debnam promised to cut 30,000 public service jobs. While Debnam’s public service policy was considered one reason for his electoral failure, John Howard promised to wield an axe through the Australian Public Service and, in fact, retrenched about 10,000 public servants each year during his first three years in office. After five years, one third of the service had been retrenched.

Joe Hockey has pledged to retrench 12,000 ‘‘for starters’’ if the Coalition wins the next federal election.

The Treasurer expects the budget will be unpopular and he’s most likely right. Australians value public services and hold public servants in high regard.

Attitudinal surveys during the past two decades indicate very strong support for increased spending in public services and willingness to pay more tax to fund services.

A study last year by Per Capita found four in five Australians favoured increased funding for social services.

The case for shedding thousands of public servants has not been made and there’s every reason to expect that fewer public servants will mean diminished public services and other flow-on community impacts. It’s not possible to surgically remove ‘‘back room’’ public servants without impacting on employees engaged in direct (frontline) service delivery.

The most visible public services rely on less visible policy development, financial management, monitoring and enforcement, law making and all the other functions that comprise the public service.

Axing public servants is unlikely to save money or improve the state’s economy. When other governments have abruptly retrenched public servants, the consequences have included redundancy packages, costly reliance on consultants for services previously fulfilled by public servants and the loss of capacity for higher level policy development, analysis and planning.

And of course, there are the immediate consequences for the employees, their families and communities.

Cutting staff to the minimum required to deliver basic services is likely to remove agencies’ capacity to innovate and experiment, to plan how to meet community needs in the future or to prepare for times of crisis and increased demand.

Advocates for a smaller public service argue that the number of public servants in NSW blew out under Labor and that we simply have too many.

In reality, the public service hasn’t kept pace with population growth. Since 1995, the number of NSW public servants has increased by 15per cent while the population has grown by 19per cent.

There are now fewer public servants per capita in NSW than in all other states and territories, except Victoria.

Driving on bald tyres is one way to save money. So long as the roads are straight and smooth, we brake and accelerate smoothly and nothing unexpected happens, it’s possible to postpone replacing tyres for months and pocket the savings.

But the public service – and the public sector of which it is just a part – needs to be prepared for the unexpected. State public services in NSW, Victoria and Queensland have been praised for their response to floods and fires in recent times. And the public sector came to the rescue during the Global Financial Crisis when the private sector needed bailing out.

As a nation, we already invest less in our public sector than most other developed nations.

James Whelan is the research director for the Public Service Program at the Centre for Policy Development.

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