Public Sector job cuts will not hurt state economy

Monday 20 August | Categories: Workplace and Employment Policy, Economic Policy

CCIQ believes that the current budget savings and job cuts being implemented by the Queensland State Government will not have a negative impact upon the state economy, but will impact significantly upon the state’s budget deficit, debt and ability to fund projects and services in the future.

Whilst the number of 20,000 jobs has been used to attempt to scare the Queensland public, it is important to remember that 20,000 jobs represents only 0.85% of the State’s entire workforce and according to the latest Commonwealth Bank Pulse Survey of Business Conditions;

• Only 0.5% of businesses indicated public sector job cuts had impacted on their business
• 1.3% of businesses stated that public sector expenditure cuts were hurting their business.

CCIQ President David Goodwin said, "Queensland businesses should not be concerned about the changes being made in the public sector."

"The reality is that at this stage Queensland is facing a budget deficit, which can only be addressed by making savings or increasing taxes.

"As a business owner I have had to make savings in my business, I have had to make tough decisions to balance my budget and I do not believe that the Queensland government and public sector should be any different.

"Like any business, Queensland’s state government cannot go on living beyond its means and expecting tax payers and business to fund an ever increasing deficit.

"Unless the government acts now to balance the books, debt will continue to spiral and this will impact upon public spending, infrastructure projects and commercial growth strategies.

"A government in a position of unsustainable debt cannot invest and that will significantly impact Queensland competitiveness and subsequently damage the state economy."

In respect to proposed State Government job cuts CCIQ highlights the following;

• In each of the past five years public sector wages growth has significantly outpaced private sector wages growth as measured by the ABS Labour Price Measure.
• Since the GFC wages growth for the private sector in Queensland has grown by 15.7% yet public sector wages in Queensland has grown by 19.4%.
• This difference would account for approximately $707 million in budget savings in 2011-12.
• Applying private sector wage outcomes to the public sector would have wiped a quarter of the budget deficit off the books.

The Queensland Public Service Commission confirms as at March 2012:

• The head count of public servants (prior to recent State Government efforts to reduce numbers) stood at 206,881 FTEs.
• This compares with 147,722 in June 2001.
• Since June 2001, the QPS has grown by a whopping 59,159 FTE positions or by 40%
• During this time Queensland’s population has only grown by 24%
• Since the GFC the QPS has grown by 18,908 FTEs an outcome that is totally at odds with Queensland’s private sector.

There is recognition that the uncertainty associated with potential loss of public sector jobs is impacting on affected individuals confidence and inclination to spend, however the consequences of not making the difficult decision today will only compound over time and will be significantly more serious.

The State Government is strongly supported by the Queensland business community in its efforts to sure up the fiscal integrity of the State’s finances.

The absolute majority of businesses reported a strong recognition that public sector spending cuts are overwhelmingly for the benefit of the Queensland economy as a whole and needed to occur.

CCIQ is strongly committed to the State Government’s efforts to stabilise debt levels, return the budget to a fiscal balance by 2014-15 and regain Queensland’s AAA credit rating.

Good economic and fiscal management has the profound ability to influence business and consumer confidence, spending and investment decisions.

Queensland businesses are concerned about the State Government’s inherited deficit sizes and high levels of Government spending.