Gorging, dieting, gorging - the cycle continues with the tap now fully 'on' for new hires on the public payroll with a +12,500 rise in just one year. We review the latest State Services Commission data

Gorging, dieting, gorging - the cycle continues with the tap now fully 'on' for new hires on the public payroll with a +12,500 rise in just one year. We review the latest State Services Commission data

Most taxpayers have an interest in where and how their tax dollars are spent.

And most tax dollars are spent on the public payroll.

In the year to June 2018, the Government's payroll amounted to $23.7 bln, up +4.8% from the previous year (or a rise if +$1.1 bln).

This $23.7 bln is 30% of all operating expenses and is only exceeded by the gloriously nontransparent category called "Other operating expenses" (see page 63, which presumably includes where consultants fees are categorised).

But the State Services Commission does publish an annual review of the public workforce and that sheds considerable light on what we get for the $23.7 bln.

Eighteen percent of all workers work for the State. That is a level unchanged in twenty years. Back in 2000 that amounted to 288,669 workers. By 2008 it had grown to 358,140, a rise of almost a quarter. By 2017 it had grown further to 389,924, a subsequent rise of +9%. In the year to 2018 it grew by +12,851 or +3.3% in just one year. The reference years relate to the changing Labour and National administrations.

The SSC data also allows us to see payroll numbers by sector:

Year Education Health Public SOEs Other Local Total
  Sector Sector Service   Govt. Govt Public
               
2000 110,370 54,413 30,004 24,815 35,379 33,688 288,669
2008 124,548 63,642 45,934 37,105 44,591 42,320 358,140
8yr rise +14,178 +9,229 +19,930 +12,290 +9,212 +8,632 +69,471
Avg%/pa +1.4% +1.8% +4.8% +4.6% +2.6% +2.6% +2.4%
2017 132,475 76,862 48,871 36,522 47,514 47,680 389,924
8yr rise +7,927 +13,220 +2,937 -583 +2,923 +5,360 +31,784
Avg%/pa +0.7% +2.1% +0.7% -0.2% +0.7% +1.3% +0.9%
2018 137,995 79,322 51,358 36,227 48,658 49,215 402,775
1yr rise +5,520 +2,460 +2,487 -295 +1,144 +1,535 +12,581
Avg%/pa +4.2% +3.2% +5.1% -0.8% +2.4% +3.2% +3.3%

In the past year, we have seen the fastest rate of growth in the wider public sector in a generation, faster than for the Clark/Cullen administration. In fact, the growth is even stronger than the totals reveal because SOEs expanded fast under Clark/Cullen but they have been shrinking ever since, including under Ardern/Robertson.

And it is wise to note that public sector payroll numbers have been growing faster than real GDP growth (or inflation, for that matter).

It is also interesting to note that the charge that the health sector has been held back by understaffing under the Key/English administration doesn't hold water. Not only was health sector staffing rising faster under them than Clark/Cullen, the funds allocated rose faster as well. (Doctors and nurses will always 'want more' and will choreograph a public campaign for 'more' (= higher pay for the same work, pp 17-19).

The other impressive change is the sudden spurt in all other public sectors in the first year of the Ardern/Robertson administration. Even Local Authorities got in on the action.

Public sector capping policies may now have been removed, but a new, even-faster spurt will likely add significantly to the $24 bln payroll cost to the Government and is probably going to have to be reined back in at some point with a new capping policy by some future Government. The gorging-and-dieting cycles continue. It's Christmas and everyone likes gorging until they have to pay. The trick for the public sector unions is to get someone else to pay.

Public sector workforce

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Public Service
Source: SSC
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Health Sector
Source: SSC
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Local Government
Source: SSC
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SoEs
Source: SSC
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Other
Source: SSC
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Education
Source: SSC

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29 Comments

Hmm, I was a beneficiary before - maybe I can be one again and earn six figures.

Who needs/wants more staff.....Immigration, Police, Heath, Education, Prison Service, MBIE, DOC ...in fact pretty much all PS need more staff.

So what do you mean by gorging? The public demands these services, so either pay for them or change the model (charge new immigrants $50 k,, visitors $200, make prisoners work).

Visitors may prefer Australia than spending $200 but those who do come will be the wealthier ones we need - not freedom campers.
Many immigrants are already paying over $50k - to corrupt agents in country of origin and education fees and then back-handers for jobs. But your idea makes sense - if a boss will give them a job plus pay $50k for a work permit then they are really wanted; better judgement of skill than any bureaucrat can make.

Given the numbers and the average salaries, add the unionista and the bolshiness, throw in a few more 10%+ pay claims, and we are solidly in wage inflation territory. Does not augur well for future Gubmint budgeting but it does keep them unemployment rates well down. Pity about overall productivity but eggs, omelettes.....

Eighteen percent of all workers work for the State. That is a level unchanged in twenty years.

Wah, More right wing whinging.

The following sentences in the referenced paragraph provide appropriate context and further data. Note carefully the growth rates as related to the various dates. Also note the growth rate for 2017 to 2018 and compare to population growth rate for the appropriate years.

Looking at the public sector workforce numbers, and referencing to total NZ population, I get a ratio of 7.45% of population being employed by the public sector in 2000 (as per the article workforce data, and from the population as per stats.govt.nz website). In 2008 (end of Labour govt), the ratio was 8.36%. In 2017, the ratio was 8.05% (end of National govt). The current trend appears to be an increase in the public sector workforce, similar to the increase at the start of the century. A trend appears to start showing, that public sector workforce increases when Labour is in power, and decreases when National is in power.. Yes, when one goes through a decade of one flavor of govt and then a decade of the opposite flavor of govt, the net result may be rather similar. A more appropriate assessment would be to look at the data at the end of each govts run, instead of comparing the data after a run of Labour and then National, and concluding that there is no net change. Evaluating appropriate data matters. Stating preconceived notions is rather less important.

A more important discussion is whether the public sector workforce size should be increased or decreased.

Or you could ignore the numbers altogether, and ask the real question. Does the govt have enough (and the right skillsets) to do the tasks we ask of them. Anything other than that is really just noise. If they don't have enough staff to do the jobs we ask of them hire more with the skills that are needed (and jettison deadwood along the way). If they have the right skillsets and adequate people then look if we can pare the numbers down without compromising on the performance of the tasks. Looking at numbers for numbers sake is pointless really.

I agree with all of what you wrote, excepting the first and last sentence. Those two sentences are nonsense in the context of the remainder. How does one define "enough" without using a number?

By outcomes, are they acheiving what they need to? i.e. are ird processing x% of tax returns in Y days. If not they need more staff/better systems (or replace the deadwood with effective staff). The actual number of staff is a side effect not a metric.

Thanks for drawing this to our attention. So this is one trend now.
In concert with this is the never ending centralization/ decentralization cycle takes place within organizations.
Plus the drive for diversity (which in my opinion will end up being be a cycle of some sort).
Plus the computerization of certain jobs.
Plus the pull back in international trade.
If it your job is to predict the future, it is getting very difficult.

If CoL actually knew what they were doing it would be a good start. The cost of human labour is high & the govt's adding labour. Everyone else is talking AI & replacing human labour but the govt's adding labour.
I would have thought a decent website is a good place to start. The future is less total people, more smart people. There are too many freeloaders on this train.

Why worry? Spend more. Party. Have fun. She'll be right.

Actually, come to think of it, I'd probably choose to have immigration at a lower rate, one that we can cope with easily, and put up with a modest amount of extra government overspending if that's what it takes. Solve the biggest issue first.

14
up

God knows we need a few hundred Immigration fraud investigators.

They have less than 30 (according to a recent article on Stuff). That is for >100k work permits per annum, about 40k permanent residents per annum and almost limitless tourists who may work or overstay. I hate to see more civil servants but immigration is in desperate need of skilled investigators along with boosting the labour inspectorate.
Of course INZ can set entry criteria without parliamentary approval and it can increase visa charges without parliamentary approval. They only have to pull their finger out but they have chosen to have another consultation and report which is due next year.

Eighteen percent of all workers work for the State. That is a level unchanged in twenty years.

That's really the important statistic. Effectively no change since (roughly) the 1990s. Seems quite restrained to me given social needs seem much more complex these days.

Do social needs require workers for their solution? Yes for education - Growth in tertiary, need for smaller class sizes and more teachers assistants. Yes for health-care with better survival rates for cancer, heart attacks and for children born with severe defects. But No for street-sweepers, garbage-collectors, etc: more machines.
It gets interesting with jobs that are optionally state employed - for example contract nurses and privately run prisons. Very interesting where regulations impose bureaucracy: non-universal child benefit, council building consents instead of compulsary insurance, work-visas with INZ specifying skill and availabilty rather than charging the employer a sufficient fee.

True Kate, but then again the age of technology has meant to have introduced a great improvement to efficiencies, communications, records, research etc. Personally I am a great believer in Northcote Parkinson. Work expands so as to fill the time available for its completion. And to that he added that the same principle applied to increased staffing. The trouble is for example if we take communicating today you would have to admit there is a whole lot of useless unnecessary emailing going on that contains a whole lot of bumph! Yep it’s quick but sorting out the actual message is time consuming, oh that is, if anybody takes the trouble. Someone told me that the lowest ranked list MP today has more staff attached to his/her office than Muldoon had when he was PM.

I take it this doesn't include local bodies, DHB's etc?

Gorging, dieting, gorging...

Huh? When was the dieting?

My experience of dealing with the public sector in Wellington is that the contracting / consulting gravy train has been drying up for many with public sector organisations no longer prevented from hiring headcount and having to use contractors instead. Organisations were paying far more for roles that should have been permanent headcount, and were regularly losing accumulated knowledge as these contractors sort to move on to their next project. And the problem was, they'd normally want to move on in the middle of a project that was going well (easier to look good), making it even more expensive for the organisations.

Contractors enjoyed a grand old gravy train over the last decade! We actually had a few of these contractors knocking on our door for permanent jobs once organisations were no longer bound to rely on using contractors to avoid increasing headcount.

It's not as simple as increasing headcount vs not increasing headcount. More, one of those areas where the cost is simply accounted for differently, but never went away.

If you'd asked me to guess, based on changes in population demographics, I'd expect a rise in some areas (e.g. Healthcare) and reduction in others (e.g. Education.)

Not sure about Education. They haven't replaced teachers with robots yet. Fans of immigration claim we get fully skilled workers without the costs of educating them. However targetting young usually 3rd world students means young families. OK the kids are Kiwis but young immigrants have bigger families than native New Zealanders. That is why all my local schools are adding new buildings and desperately searching for teachers.

What is your opinion of this

Around the English speaking world there must be any number of academics who are top-rate educators. Their lectures or tutorials should be recorded for posterity and distributed to schools who should have lecture halls with large video screens at the front. Or smaller screens in each class-room. Teacher can dial up the appropriate lecture - best of both worlds

While it is essential to have face-time with students, for the more detailed learning is it is better to have the best tutor who has the best teaching-communication skills while the face-time teachers simply become minders and organisers

Total agreement. If tertiary education was about a deep desire to learn then (a) number of students would drop drastically (b) students would attend lecture in non-registered subjects (c) students would not bother this the hassle of graduation.
If you really want to understand quantum physics then the experts are online. Why attend a NZ uni lecture when you can see MIT and Harvard profs on YouTube?
Close 90% of our university facilities and sell the land, sack 75% of the academics, open an 'Online Uni of NZ' with just a small number of face to face workshop/seminars.

So I'm wondering why the latest attempt at re-arranging the education system is more concerned about hubs and aggregating the administration of schools and doing away with committees rather than addressing the quality of the education itself

There is optional education = tertiary and that wastes money that ought to be spent on apprenticeships. And the child minding compulsary education that ought to be preparing kids for becoming adults but wastes time and money.
The hubs and aggregating might be acceptable if chosen by the schools not imposed from above. Seems like more unwarranted bureaucracy - at least we know when a school goes bad who is responsible - with the new system responsibility will be divided and hidden. God I hate to sound like a national supporter.

Around 50% of our students at Massey are distance learners. I've really enjoyed working in this sector. It's definitely the future of learning but not an easy conversion for all subject matter. But, in my opinion, we have to get better and better at enhancing the opportunity for one-on-one experiences by distance learners through developing more sophisticated techniques to incorporate interactivity in our distance teaching. In my subject area (planning/environmental management) communications skills (empathy, lateral thinking, open mindedness, listening skills etc.) are in many cases more important than theoretical knowledge in the workforce. I think that may be true in many subject areas (e.g., teaching, social work, business management, law, etc.), all of which makes effective distance teaching/learning more challenging.

As ever you make sense. And you are involved and know what you are talking about and I'm an ignorant layman (BSc general science). I was coming from my area of study - long time ago - maths and science and remember sitting in giant lecture theatres attending lectures at 9am in maths - no interaction with the lecturers with over 100 students. Clearly a decent lecture online from a world leader would be better (just the instant replay would be worth it). But haven't things changed - now nearer to 50% school leavers go to Uni when it used to be 5%. And what are they studying: planning/environment management - how can NZ absorb 50% of school leavers being trained to be 'managers'? Does seem like a waste of money - they will end up as secretaries and if lucky manage a Pizza outlet. That still wouldn't mattter if they were enthusiastic students desperate to learn. Few are.

Kate,

In 2007,I started an Open University degree done through NZ and lasted about 18 months. I had no problem with the course work,it was a BA in the Humanities,but got no feedback from the markers and had no contact with other students.
I now do MOOCs through Futurelearn-over 30 to date-and they fit in well with my lifestyle.

"Eighteen percent of all workers work for the State. That is a level unchanged in twenty years."

There is thus no issue.

If the public sector is too small all you end up doing is employing more consultants at higher charge out rates.

But yes:
1) all the work the public sector does should go through business case assessment - i.e. is it worth doing a specific process & 2) all processes should be continually reviewed from a productivity perspective. i.e. can I lower the cost for the same quality & time, can I lower the time for the same price & quality, or can I improve the quality for the same time & price.