Gorging, dieting, gorging – the cycle continues with the tap now fully ‘on’ for new hires on the public payroll with a +12,500 rise in just one year. We review the latest State Services Commission data

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Most taxpayers have an interest in where and how their tax dollars are spent.

And most tax dollars are spent on the public payroll.

In the year to June 2018, the Government’s payroll amounted to $23.7 bln, up +4.8% from the previous year (or a rise if +$1.1 bln).

This $23.7 bln is 30% of all operating expenses and is only exceeded by the gloriously nontransparent category called “Other operating expenses” (see page 63, which presumably includes where consultants fees are categorised).

But the State Services Commission does publish an annual review of the public workforce and that sheds considerable light on what we get for the $23.7 bln.

Eighteen percent of all workers work for the State. That is a level unchanged in twenty years. Back in 2000 that amounted to 288,669 workers. By 2008 it had grown to 358,140, a rise of almost a quarter. By 2017 it had grown further to 389,924, a subsequent rise of +9%. In the year to 2018 it grew by +12,851 or +3.3% in just one year. The reference years relate to the changing Labour and National administrations.

The SSC data also allows us to see payroll numbers by sector:

YearEducationHealthPublicSOEsOtherLocalTotal
 SectorSectorService Govt.GovtPublic
        
2000110,37054,41330,00424,81535,37933,688288,669
2008124,54863,64245,93437,10544,59142,320358,140
8yr rise+14,178+9,229+19,930+12,290+9,212+8,632+69,471
Avg%/pa+1.4%+1.8%+4.8%+4.6%+2.6%+2.6%+2.4%
2017132,47576,86248,87136,52247,51447,680389,924
8yr rise+7,927+13,220+2,937-583+2,923+5,360+31,784
Avg%/pa+0.7%+2.1%+0.7%-0.2%+0.7%+1.3%+0.9%
2018137,99579,32251,35836,22748,65849,215402,775
1yr rise+5,520+2,460+2,487-295+1,144+1,535+12,581
Avg%/pa+4.2%+3.2%+5.1%-0.8%+2.4%+3.2%+3.3%

In the past year, we have seen the fastest rate of growth in the wider public sector in a generation, faster than for the Clark/Cullen administration. In fact, the growth is even stronger than the totals reveal because SOEs expanded fast under Clark/Cullen but they have been shrinking ever since, including under Ardern/Robertson.

And it is wise to note that public sector payroll numbers have been growing faster than real GDP growth (or inflation, for that matter).

It is also interesting to note that the charge that the health sector has been held back by understaffing under the Key/English administration doesn’t hold water. Not only was health sector staffing rising faster under them than Clark/Cullen, the funds allocated rose faster as well. (Doctors and nurses will always ‘want more’ and will choreograph a public campaign for ‘more’ (= higher pay for the same work, pp 17-19).

The other impressive change is the sudden spurt in all other public sectors in the first year of the Ardern/Robertson administration. Even Local Authorities got in on the action.

Public sector capping policies may now have been removed, but a new, even-faster spurt will likely add significantly to the $24 bln payroll cost to the Government and is probably going to have to be reined back in at some point with a new capping policy by some future Government. The gorging-and-dieting cycles continue. It’s Christmas and everyone likes gorging until they have to pay. The trick for the public sector unions is to get someone else to pay.

Public sector workforce

David Chaston's picture
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