John Roughan: This government of state servants is bravely tackling its toughest decision yet

Finance Minister Grant Robertson says increased spending in the Budget will be directed where need is greatest. Photo / Mark Mitchell

OPINION:

Sitting over a beer after tennis one night last week, a player who works for a district health board said, "Have you heard about the nurses' strike?"

"No," I replied with surprise.

"Yes," he said, "they're all geared up, it's going to happen."

A penny dropped and I told him something he hadn't heard. "Today the Government announced restrictions on public sector pay increases for the next three years. Only those under $60,000 will get a rise, those over $100,000 get nothing, those in between – maybe, if they can make a special case."

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I'd heard the news earlier that evening and it made sense now. We've almost forgotten this Government was hit by a wave of astronomical state service pay claims when it first came to office. At this point in 2018 teachers were claiming 16 per cent over two years. Nurses were not revealing the size of their claim but also threatening action.

By July, nurses were staging one-day strikes, by August primary teachers were doing the same. And they were just the shock troops for a concerted push by state service unions to put the squeeze on the first Labour-led Government they had seen for a decade.

Three years ago the new Government gave in. Stuart Nash told Mike Hosking this week the 2018 settlements cost $4 billion for the teachers and nurses alone. He mentioned this more than once.

Grant Robertson, when he announced the pay restraint in a speech previewing the Budget next week, did not make the reason clear and commentators remain confused. There are probably two reasons: one fiscally and industrially tactical, the other socially and politically strategic.

Robertson said the Budget will be finely balanced between careful management of the economy (read public debt) and a stimulus to accelerate the recovery from Covid-19. Increased spending, he said, would be directed to where the need is greatest.

Prime Minister Jacinda Ardern and Deputy Prime Minister Grant Robertson during their post-Cabinet press conference at Parliament. Photo / Mark Mitchell

Clearly there are greater needs than another pay increase for everyone in the public sector. It was tactically wise to make this known before the unions started campaigning for public support again and it has put the Government on the front foot for the next round of negotiations.

Labour governments are particularly vulnerable to pressure from state sector unions for electoral reasons and this one has accommodated state servants' interests than most. As soon as they took office it relieved them of Bill English's service targets and declared they'd been "underfunded". (Aren't we all?)

It is a government that depends on public servants more than most because it seems to think its role is to make decisions in principle and it's up to officials to work out how they might be made practical. It's only recently, by setting up an "Implementation Unit" in the Beehive, that the Government has acknowledged things are not getting done.

It's a government that deeply believes public services should be delivered only by state servants and are best run by a centralised national monolith. The decision to abolish district health boards is only the most recent - and meritorious - example.

Workforce training decisions have been taken from industry organisations and given to polytechs, which have been merged into a single national institution. School boards of trustees have lost zoning rights and the Education Ministry is now drawing new zones to reduce competition for pupils.

Social housing is now run entirely by the state housing corporation, excluding charitable organisations that want funding to help meet the need. In just about every field of government activity, it prefers the state to provide.

This mindset is now infecting the Covid-19 vaccination programme, where private practitioners with their staff, facilities and contact with patients, have been spurned in favour of a centrally managed national distribution.

This is very much a government of state servants for state servants. In its decision to limit their pay it probably calculated that having done so much to enlarge their numbers, increase their funding, relieve them of targets and protect them from competition, it can ask this much.

It is the bravest decision the Ardern Government has yet made – braver even than lockdowns. Decisions are easier in a crisis, inaction becomes more frightening than action. It is decisions people don't have to make but should make that measure their mettle.

This one is so courageous commentators are picking Jacinda Ardern will cave in as she did on capital gains tax. But the strategic benefits to her of public sector pay restraint may be more compelling.

Politically, the decision should impress the National voters who crossed over last year. Socially, it demonstrates Labour is serious about tackling inequality. If this Government cannot reduce inequality in the incomes of its own sector – employing about 13 per cent of the total workforce – it will be an admission that all its talk of inequality is just that, all talk.