2. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Minister of Finance
Does he stand by his statements of last year that he will be taking “a very clear line on state sector wages and salaries” and that “State sector CEOs need to be aware we expect that dividend to emerge starting from this year, and that one of the implications of that will be careful management of labour costs.”; if not, why not?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Yes, and since those statements we have seen the growth rate in core public sector wages fall slightly below the rate of private sector wage growth.
What, then, does the Minister make of reports that the pay rates for policy analysts have gone up by 25 percent in about the last 18 months to a range of $80,000 to $150,000, contributing to a 21 percent growth in incomes in the Wellington region, twice the rate of the rest of the country?
Hon Dr MICHAEL CULLEN Link to this
I will deal with the issue of the 21 percent, and I will quote from a New Zealand income survey: “The 21 percent increase in income for the Wellington region is subject to a sampling error, and is not a very reliable statistic to use.” That quote is from the original official document. If the member thinks that that is strange, then perhaps he might care to go back just a couple of years to between 2003 and 2005. Over that entire 2-year period, according to the same survey, the average weekly income in the Wellington region rose 0.6 percent. If one believes that, one will believe anything.
Hon Mark GoscheHas the Minister received any reports on the benefits of increased wages and salaries across the whole economy?
Hon Dr MICHAEL CULLEN Link to this
The fact that we have seen increased wages and salaries across the whole economy has led one commentator to note that over the time this Labour-led Government has been in office people have become “much more secure than they were.” These comments came from Bill English, who went on to say that this economic security meant that there was no need for a radical change in course.
R Doug WoolertonDoes the Minister believe that the Government should be holding down State sector salaries against the market, as Mr English seems to be suggesting?
Hon Dr MICHAEL CULLEN Link to this
No. The State sector has to compete just as the private sector does and, of course, the areas where State sector wages and salaries have risen much more than the average have been primarily those of the health sector followed by the education sector. If, of course, we had not seen significant salary increases in the health sector, we would have lost a much higher proportion of doctors and nurses offshore, where salaries in health tend to rise towards the highest level.
When the Minister said that he will be taking “a very clear line on state sector wages and salaries”, did he think that chief executives would take that as permission to lift the range of salaries for policy analysts from $80,000 to $150,000, and for his own department, Treasury, to have one in three of its staff paid over $100,000?
Hon Dr MICHAEL CULLEN Link to this
Treasury is an organisation that has had an extremely limited increase in its funding over the last 6 years, or so. It is composed of extremely high-quality staff, and we have to pay for that. We are continuing to lose staff into the private sector where wage rates are higher. But I remind the member again that core public sector wage movements over the last 6 years have very, very closely matched private sector movements, and over the last year have actually been slightly below private sector movements.
Why should taxpayers earning $39,000 pay 33c in every extra dollar they earn to pay for Government policy that bans beer fridges and has civil servants ringing homes to pursue illegal babysitting?
Hon Dr MICHAEL CULLEN Link to this
I am not aware of a single Treasury policy analyst who has been ringing homes and asking questions about babysitting.
Can the Minister answer the question as to why people on $39,000 should be paying 33c in every extra dollar they earn, in order to fund a 25 percent increase in the salaries of policy analysts in Government departments when they clearly give bad advice?
Hon Dr MICHAEL CULLEN Link to this
The member is now making up the numbers based on anecdotal data. I remind him again that core public sector wage movements have, in fact, been mirroring the private sector over the last 6 years—
Hon Dr Nick SmithHon Dr MICHAEL CULLEN Link to this
—oh, they have; those are the official statistics—and the only areas where public sector wage rates have increased much faster have been those for doctors, nurses, and teachers. And every time doctors and nurses threaten strike action, the Opposition health spokesperson calls upon us to settle immediately.
Why should someone on $39,000 pay 33c in every extra dollar they earn not just to pay for substantial increases in salaries but also to fund an expansion in the number of people employed in core Government departments from 30,700 back in 1999 to 42,200 in 2006?
Hon Dr MICHAEL CULLEN Link to this
Firstly, as the member well knows, some of that growth is due to reclassification. For example, the entire Group Special Education was taken from outside the core State sector to inside the core State sector. That was a movement, I think, of something like 1,800 staff in one fell swoop. Secondly, the growth in the core State sector has not been larger than the growth in total employment in the economy. That has not been the case, at all. Thirdly, the largest growth in the core State sector has been in the service delivery areas, including those of the police, the Department of Corrections, and the child welfare officers who are part of Child, Youth and Family. Those are areas in which the National Party keeps complaining there are not enough people employed by the State.