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Queensland Public Service Headcount: adhere to the sixth fiscal principle or jettison it

On the 14th June 2016 the State Government as part of the last State Budget introduced a sixth fiscal principle for Queensland:

Maintain a sustainable public service by ensuring that overall growth in full–time equivalent employees, on average over the forward estimates, does not exceed population growth.”

The principle in theory means FTE growth across the forward estimates will average less than 1.5 per cent each year which is the forecasted growth in Queensland’s population.  This is a very important principle as 46.3 per cent of State Budget expenditure is comprised of employee related expenses.  Balancing the budget and paying down debt relies on significant discipline in this area.

However this objective will not be met in 2016-17 (the first full financial year after the principle was introduced) with the FTE headcount only after two quarters already up by 2.2 per cent on 2015-16 and well ahead of the 1.5 per cent anticipated population growth.

The way the principle is worded means that effectively it will never need to be adhered to.  The words “on average over the forward estimates” quite simply means there is never any accountability for the financial year just been or about to commence as the government has three more years to at least in theory achieve the objective.  Furthermore it is on a rolling basis so there is never really a day of account.

Clearly the State Government is struggling to manage headcount and employee related expenses.  The State Government’s fiscal credentials are on the line on Tuesday this week and it will need to improve its performance in this area.  The evidence is pretty clear in this regard. Since the State Government came into office:

  • The Queensland Public Service (QPS) has increased by 15,782 FTEs to 212,619 up 8 per cent.
  • QPS FTEs as a percentage of the population has increased from 4.1 per cent to 4.4 per cent which expressed alternatively means the number of Queenslanders to each public servant has fallen from 24.1 to 22.8.
  • QPS FTEs as a percentage of total employment has increased from 8.5 per cent to 9.1 per cent. 

In short the public service has been ballooning whilst private sector full-time jobs has shrunk across this period.  Without the 15,782 jobs created the State’s unemployment rate would be 7.0 per cent and not the 6.4 per cent currently recorded.

Unfortunately with such a rapid rise in headcount the damage has already been done to the Budget and the sixth fiscal principle is almost now irrelevant.  The additional 15,782 FTEs has an impact on the budget to the tune of $1.6 billion each and every year.

The State Government has argued that this increase represents the actioning of election promises to restore frontlines services.  This is no doubt the case but at the same time it is not unreasonable to want to see clearly defined improvements in service delivery as measured by KPIs.  What is the commensurate improvement in student outcomes, patient health, public transport reliability and community safety?

What the State Government has promised and what it is delivering in respect to public service numbers are two different things.  Either genuinely adhere to the fiscal principle or jettison it.

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Thanks Gene as usual great insight delivered in a balanced way. When penning these blogs I am aiming to promote transparency and in turn accountability. What I would love to see is greater use of KPI's though open data to access the effectiveness and efficiency of government service delivery. Cheers Nick

Reply

Hello Nick, yes, good point about how much latitude the principle provides given it is expressed as applying over the forward estimates. I'm sure commentators, not to mention the Opposition, will be keeping a close eye on whether they are on track to meeting it, however. Logically it would apply from the time of the last budget when it was introduced I recall. It wasn't one of their original fiscal principles and they introduced it after they had already massively boosted public service numbers, which they argued was necessary after the cuts under the previous government. So I would suggest giving the government the chance to live up to the principle.I suspect it will be challenging for the government to stick to it, however, and if it doesn't then criticism is warranted.

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