'The Nation'


Tony Ryall

Interviewed By Stephen Parker

STEPHEN This week the British Chancellor Osborne unveiled a 40 billion dollar pound package of spending cuts and tax increases which included a two year public sector wage freeze. It's the sort of thing that’s happening all over the world as governments get to grips with massive debts which they built up after trying to rescue their economies during the great financial crisis. Here in this year's budget Finance Minister Bill English announced that future budgets will increase spending by only 2%, just what that will mean for our public servants – with me now is State Services Minister, Tony Ryall.

Mr Ryall I want to talk about that indication by Bill English on no new money for three to five years. In terms of the state sector what does that mean, does it mean fewer staff, no pay rises.

TONY RYALL – State Service Minister

Well what it does mean is that most government departments will be getting no increase in their funding over the next three or five years, with the exception of a few. This budget for example has got health, education and research as the people getting the bigger increases. What that means is that departments are going to have to look at every dollar that they spend and how they run their operations, and activities and yes it does mean that we will in many cases see fewer people working for those departments as they cope with the lower or no funding increases in the foreseeable future.

STEPHEN And for pay? No pay rises?

TONY Well the government's been quite clear that pay should be keeping in track with what's happening in the private sector, or below that. It doesn’t mean no pay rises, what it does mean is a greater focus on productivity and value for money, and I must say what we've seen in the last year, and I think you have to recognise with some gratitude the responsibility of so many public servants who have recognised that pay claims have had to be restrained and moderated during this quite difficult economic period.

STEPHEN Well what I'm asking you though is really what the public can expect from the government in terms of pay rises. It seems like the government is running an unofficial pay freeze for the state sector.

TONY No we've not got an unofficial pay freeze in the public sector, there are significant numbers of public servants who've had pay increases in the last year, and will continue to get them, but thieve been nowhere near the scale of the previous level of pay increases, and they have been reflected in much more moderate and restrained pay increases. The real message to government departments is if you have no extra money coming into your budgets for the next three to five years, they have to look at how they can get best value for money, improve productivity, and how they run their businesses to improve services for the public, and that’s going to be a real challenge.

STEPHEN Yes and part of that challenge also means the number of public servants is being scaled back. I just want to ask you about the numbers, and I want to know if you accept the numbers that we have. From our understanding we've had 1,480 jobs go, another 460 to go this year. That leaves you at around 36,919 jobs in the public sector. Is that about right, is that the figures you are working from?

TONY Well that’s certainly an indicator – I don’t have them exactly with me here – but that’s certainly the figures that we've had to date. We're expecting an update on what our projections of what staff numbers will look like over the next year or so, but there will be further decreases, we're expecting to lose maybe another 500 jobs over the next year. Those are the projections that we had earlier in the year, I think we'll see that number grow in the next few months as various departments look at how they're going to live within no funding increases and getting best value for the taxpayers. The real important message we're giving the public service is just like the private sector, just like families. Things are a lot tighter and people have to make sure that they're focusing on productivity and value for money.

STEPHEN By how much? How many fewer jobs would you expect in the public sector beyond that figure of 500 that you mentioned?

TONY Well we'll be able to give you a better picture of that over the next couple of months as the various projections from the government departments come in. I think we'll see several hundred more over that 500, that’s a reflection of the fact that individual government departments are looking at how best they can organise themselves with no funding increases, the reason being that times are still very tight, and just as families are having to live within a constrained budget so does the public service and many of our public servants are recognising that they too have a role to play in this, and that’s why you're seeing quite restrained pay demands, recognition that everyone's working to improve productivity and give the taxpayers a better deal.

STEPHEN Well you're acknowledging there could be hundreds more jobs to go. Do you have a level where you’ve decided is the minimum level of what is acceptable in terms of the size of the state sector?

TONY No we don’t have a minimum level of what we consider is acceptable or otherwise, we're really committed to taking a longer term approach to this and working with individual departments to make sure that they can live within a lower funding path increases, and at the same time make sure they're improving their front line services. You’ve seen what's happening all around the world, you know significant pay reductions in many parts of Europe, freezes on salaries, people not being replaced. Here in New Zealand I think we're taking a more moderate and considered approach, we've got the cap on public service, we're asking individual departments to focus on value for money and best deal for the taxpayers, and you're seeing that happen.

STEPHEN Surely the outcome of the government moves that you're outlining is more industrial disruption. I mean we've heard for example in the area of ACC there's been a breakdown in the pay talks that a number of people have been walking off the work site. There are other areas that there are warning signs that there will be quite intense discomfort with where the government's going. Are you prepared for a period of industrial unrest within the state sector?

TONY Well actually I think what we've seen in the last year is quite a recognition from a large number of public sector workers that there are very tight times out there. For example if you look at the health sector three quarters of the health workforce have recently agreed to a pay settlement of 2% over the next 18 months. That’s very restrained and moderate compared to the increases that were happening previously when times were better. So I think there is an awareness from public servants that things are tight. Of course there will always be various posturings by unions as they try and do the best for their members. But look you know things are still tight for many people. In my electorate we've still got roofers and builders who are working 30 hours a week, people who used to have 15 employees down to two. So we in the public service also must recognise that there is a responsibility when things are tight, are not to be demanding.

STEPHEN Right and to some extent you are politically playing on the wider view of the public's perception of the public service. Can I just put it to you though, that whilst the situation is bad in Europe and there are major steps being taken against the public sector in Europe, the situation here is not nearly as bad, and our government debt levels aren't quite as bad, and we have a situation where GST's going up, there's quite big inflation increases, and the taxcuts were really designed to offset GST increases. Don’t the unions have an argument for reasonable pay increases?

TONY Look the government is borrowing 240 million dollars a week, in order to protect health education and important social services. This government's had a longer term view and we are expecting the public service to also reflect that as well. We're not going to be back in the black for another four years, and I think many people in the public service realise that just as it's difficult for people in the private sector, and difficult for people who are running their family budgets, so we in the public service have also got to recognise that. We're seeing I think quite restrained expectations from public servants. They're aware things are tight, they're doing the best they can to be more productive and provide value for money, and we'll see more of that over the next few years. As a taxpayer you would want us to make sure that the departments are spending your money as effectively as possible, and that is why we're saying to government departments, don’t expect any big increases in your budgets for the next three to five years, that’s the same position that many New Zealand families are in and it means the public service is having to look at how it does its business, how it staffs its operations so that it can improve front line services for the public, within the resources they’ve got.

STEPHEN Just briefly on the way the public service does its work. Have you had a look at any restructuring of government agencies, for example the Families Commission, are you happy with the way that stands, is it producing valuable advice for you?

TONY Well there have been a number of public service changes announced recently, for example the Food Safety Authority is coming back within the Ministry of Agriculture. The Ministry of Science and Research and the Foundation are coming together in a new government agency. We're amalgamating the National Library, the archives, into the Department of Internal Affairs. That’s going to save up to about 25 million dollars over the next few years. We've made those sorts of changes. We're looking at opportunities that may come up from time to time, the real focus is on getting the public service focused on better value for money.

STEPHEN Would the Families Commission be within your radar?

TONY Well it's not something that I've looked at. We've looked at a number of smaller agencies, I don’t think there is much to be gained from any amalgamations there. What they're really looking at is how they can improve their back office functions.

ENDS

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