Friday, 28 November 2008

Some discreet words of warning

The Annual State of the Service Report by the Public Service Commissioner is not a document that sends the Canberra press gallery in to a frenzy of excitement. Apart from The Canberra Times, which has a particular readership to appeal to, and a minor reference on ABC radio, yesterday's words of Commissioner Lynelle Briggs escaped media attention. Which is a pity really because hidden away am ong the many platitudes and endless statistics is an important, if discreetly written, warning to the Finance Minister Lindsay Tanner about the dangers of indiscriminate budget cutting.

It has been a feature of governments for many years now to impose what is euphemistically called an efficiency dividend on departments. Instead of governments making the hard decision to scrap or wind back particular programs, the order goes out that the public service must cut administrative expenses by an across the board two or three or whatever percent. A recent addition to this philosophy of finding savings is to insist that any salary increases for individual bureaucrats in a department must be compensated by a similar reduction in the total departmental wages bill.

It sounds very simple and perhaps for a year or two it was but Ms Briggs in this year's report draws attention to some of the undesirable consequences. "Many agencies," she writes, "are now at financial crossroads—the impact of continued across the board efficiency measures is making it extremely difficult to properly maintain their core functions."

Particularly hard hit are some of the smaller agencies where it is not easy to find a few indians to get rid of so that the chiefs can be paid public service market rate salaries. The result is that good staff just don't want to work for these small agencies no matter how important their function might be. Or, as Ms Briggs puts it:

"The combined effect of the efficiency dividend and the partial funding arrangements for remuneration increases have placed pressure on some agencies whose size, or the nature of their activities, affect their potential for cost saving productivity gains to be generated year after year. For some agencies this has impacted on the remuneration levels they are able to offer. A key issue is how to ensure the APS operates in a sustainable way so that agencies of all types and sizes can attract and retain staff with the capability to deliver on their core functions. It may be timely to consider putting a safety valve mechanism in place to ensure the ongoing ability of lower paying agencies to attract and retain a skilled workforce in what will no doubt continue to be a tight fiscal environment."

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