The Public Service Commission’s instruction is clear: “Agencies should ensure pay
offers are fiscally sustainable and reflect labour market conditions, including comparability with private sector roles.”
That advice was ignored. Today, civil servants earn on average $10 an hour more than private-sector workers.
Multiply that across 481,500 employees in the wider public sector and Google calculated the cost: $10 billion a year.
Under former Prime Minister Sir John Key, the core public service numbered 39,000. Now it’s 63,000.
If Labour had kept salaries in line with the private sector and staff numbers to population growth, the Government accounts could be in surplus.
Instead, pay ballooned – thanks to generous union deals and Labour’s expansive pay equity reforms.
Pay equity settlements are the result of comparing social workers with air traffic controllers, teacher aides with prison guards and librarians with traffic engineers. All 90 different public health occupations, including technicians, have received pay equity increases.
When footballers can earn more than the Prime Minister, wage rates defy rationalisation and comparison. All the law can do and does is ensure people doing the same work get the same pay.
Equity settlements now mean GPs can’t compete with hospital wages.
Former Finance Minister Grant Robertson made a reckless promise: the taxpayer would cover any pay equity deals, even for private providers.
It was the mother of fiscal cliffs, promises made but not funded.
No responsible Finance Minister would make an open-ended commitment like that.
The incumbent Nicola Willis rightly refused. Without funding, government contractors, such as hospices, face collapse. Labour’s law had to go.
So why wait a year to repeal it?
As I understand, Willis fears the voters won’t accept the changes New Zealand needs.
This week’s Budget will tackle short-term issues while avoiding long-term structural problems, such as superannuation and ACC.
It’s a mistake. Sir Keith Holyoake, who won four elections, had a simple philosophy: “Tell the people, trust the people.”
I sat in Parliament with Holyoake. He’d claim “there are no plans in front of the Government” while outlining the very reforms those plans would later deliver. It worked.
Had ministers explained last year how Labour’s pay equity law was financially unsustainable, the public would have understood.
Instead, there was silence, reforms rushed through under urgency and a backlash.
The coalition must learn quickly. Another storm is coming.
A 2023 Court of Appeal ruling expanded the scope of cover ACC provides victims of sexual abuse.
The court ruled victims were entitled to compensation for loss of potential earnings from the time they were abused. Previously, they could seek compensation only from the time they sought treatment.
Last year, ACC put nearly $3.6b aside to cover the current and future costs of claims related to about 100,000 existing victims who could now make claims because of the new interpretation of the law.
An avalanche of claims could break ACC.
Minister for ACC Scott Simpson on Friday told the Herald the Government was mulling a law change to limit ACC’s cover. Simpson suggested other government agencies were perhaps better placed to deal with some claimants that currently fall under ACC’s jurisdiction.
If police don’t prosecute, offenders go unpunished – and the rest of us pay.
In other countries, perpetrators pay. Victims sue. Not here.
The courts and politicians have expanded ACC far beyond what the Woodhouse Royal Commission recommended.
We must ask: has ACC created a no-fault culture?
Is the explosion in sexual assaults the result of that no-fault culture?
Has ACC become unaffordable?
ACC is not the right tool for dealing with trauma. Mental health is the job of the health and welfare systems. Why is sexual abuse trauma different?
Let victims sue their abusers. Compensation should come from perpetrators, not taxpayers.
