2. AARON GILMORE (National) Link to this
to the Minister of Finance
What role can the State sector play in lifting economic growth?
Hon BILL ENGLISH (Minister of Finance) Link to this
State services represent about 25 percent of the New Zealand economy, so the sector has a significant influence over our economic performance. The Government is focused on increasing State sector productivity, because it is beneficial to the wider economy, and because it means that we can deliver more and better public services and provide better value for taxpayers. It is both desirable and necessary as the Government prepares Budget 2010 under difficult fiscal conditions due to the ongoing effects of the global recession and Labour’s reckless spending.
What steps has the Government taken to ensure that State services remuneration practices reflect the goal of increased productivity?
The Government’s expectations require State sector pay and conditions to be fiscally sustainable within existing baselines, to demonstrate value for money, and to drive productivity improvements. This follows several years of State sector pay rises that outstripped those in the private sector without a matching increase in productivity. For instance, the most recent labour cost index, for the December quarter of 2009, showed that wages increased by 0.3 percent in that quarter. Against that backdrop, it is not reasonable for some State sector groups to attempt to claim pay rises of up to 4 percent per year, when most taxpayers would be getting either no pay rises or much lower pay rises than that.
I have seen reports that, by and large, pay negotiations within the State sector have been reasonable, constructive, and forward-looking. However, some groups received pay rises of 4 percent or more last year, at the height of the global economic crisis. For example, teachers have had a 4 percent pay rise in each of the last 3 years, including last year. Teachers’ overall pay has increased by 50 percent since March 2000. Groups that have experienced increases way beyond those of ordinary New Zealanders in recent years should not expect, for instance, to have a ready reception from the public to another claim for a 4 percent pay rise.