1. CHRIS TREMAIN (National—Napier) Link to this
to the Minister of Finance
In preparing for the Budget on 28 May, what role does he see for State services in rebuilding the economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
The State services represent about 30 percent of the New Zealand economy, so the sector has a significant influence on New Zealand’s overall performance. When the private sector is tightening its belt, it is not sustainable or reasonable for State Service wages and salaries to continue rising at 3 or 4 percent a year, as some are doing now. These costs are falling on taxpayers, who are unlikely to be getting 3 or 4 percent pay rises this year.
What steps has the Minister taken to ensure that State services remuneration practices reflect the difficult economic environment?
The Government believes that it is important that wage expectations in the State services reflect the wider economy. Therefore, I have written to all Ministers, reminding them that we have a firm and consistent view on remuneration pressures. I outlined my view that we do not fund any remuneration pressures through the Budget process. We will be looking for State services pay restraint and productivity growth. There may be some groups who believe they have a special case on grounds of fairness or relativity. However, our overall expectation is that any remuneration pressures will be self-funded.
Grant RobertsonWhat does the Minister think that the reaction will be among police officers, social workers, prison workers, and other hard-working public servants to the news that they will be getting a pay freeze, but that there will be no cuts to Ministerial Services for the National Government and that under his Government 36 press secretaries are being paid more than $150,000 a year, which is twice as many as under the previous Labour Government?
In the first case, the member is wrong. The police and social workers are working every day with New Zealanders who are feeling the stress of the recession, and in my view they will be much more realistic about State sector pay pressures than the Labour members are.
Treasury’s monthly economic indicators, which were issued yesterday, reported that the majority of firms have reduced staff numbers in recent months and expect to make further reductions in the coming year. Private sector wage and salary expectations, therefore, have fallen significantly in recent months. The previous Government was focused on increasing the Public Service; this Government is focusing on increasing the services provided to the public.
Why does the Minister think it is acceptable to give himself an effective pay increase of $2,500 per year, while telling police officers, social workers, fire officers, prison officers, and other hard-working public servants that they have to accept a pay freeze?
In the first place, there is no pay freeze. Chief executives have a clear direction from the Government that they should be looking for pay restraint and productivity gains. Secondly, all of the groups that the member has mentioned are benefiting from tax cuts. From 1 April someone on the average wage gets the equivalent of $18.50 per week, and that is a significant boost in after-tax income, which the person would not have got if he or she had voted for Labour, and that is why people did not vote for Labour.
Dr Russel NormanCan the Minister confirm that according to answers to written questions, the State services saved $4.7 million last year through Govt3 sustainability initiatives; if so, is he concerned that these initiatives have been axed, and even mocked by the Prime Minister as being “hug a polar bear” initiatives, when they are actually saving taxpayers many millions of dollars?
There were some very expensive and somewhat symbolic schemes that the Minister for the Environment has determined, quite sensibly, were not worth the money. I am quite sure that with the reduction in travel, conferences, and workshops, and the reduction in the production of useless, but large, strategies over the next 12 months, the State services will be emitting less carbon and causing less climate change than they have done over any of the last 9 years under the previous Government.
What is wrong with a State Service like the Inland Revenue Department saving about $1 million annually by reducing energy, minimising waste, and engaging in other kinds of “polar bear public displays of affection”, when it cost only $700,000 to actually make those savings? Is that not a good thing, because it saves the taxpayers’ money?
There is nothing wrong with the Inland Revenue Department saving $1 million, except to say that over the next few years that will not be anything like enough.
Hon Trevor Mallard Link to this
Can the Minister of Finance give the House an assurance that all agreements currently entered into will be funded by the Government?
I can give that assurance. Because these are legally binding agreements, of course the Government will meet its legal obligations. However, that will create something of a problem of fairness. Quite large groups of State servants in this 12-month period will be getting substantial pay increases. About half of the Public Service will get pay increases, and a good number of those workers will receive increases of between 3 and 5 percent. I believe that the public will not be tolerant of those groups protesting that they are not getting enough.
Dr Russel Norman: I seek leave to table a document from the Inland Revenue Department, dated 25 February this year, which shows the savings it is making through its Govt³ sustainability initiatives.
Mr SPEAKER