7 March 2012

Report shows not much fat left on the bone after all

A Treasury report on a public service cost-cutting exercise shows that costs have actually increased by $19 million, proof that there’s little left to squeeze out of agencies that have already been cut back to their core, says the PSA.

Last year Treasury believed that agencies could save up to $236 million from the back office functions of 33 departments, but overall costs have actually increased.

The administrative and support services benchmarking report shows that the biggest cost is in ICT which has increased to $980 million and as the Prime Minister has already indicated, is likely to escalate further.

“It’s clear Treasury was way wide of the mark,” says PSA National Secretary Richard Wagstaff.

“Government departments have already found considerable savings to meet targets, so it’s no surprise that the anticipated gains from this exercise have not been realised.

“Departments have seen big cuts to their administrative and support areas over several years.

“There’s little left to cut without hitting services directly and we are already seeing this with a reduction in frontline staff in Departments like IRD, DOC, ACC, MAF, Housing and MFAT.

“The report says there’s still huge potential for savings in some departments but this is an overly ambitious claim.

“Finance Minister Bill English trumpeted this cost-saving exercise in his Budget 2011 speech and expected it to produce the bulk of $330 million in efficiency gains. Clearly, he and Treasury were wrong and they need to rethink their approach. Otherwise, we risk cutting funding to the point where departments can’t function properly for New Zealanders.

“More than 3500 jobs have gone from the public service and crown entities and we’re seeing that impact on services to the public.

“It’s time the Government stopped using the public service as a smokescreen and focused on stimulating the economy if it wants to deliver on Bill English’s plan of being back in surplus by 2014/15,” says Richard Wagstaff.

ENDS

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