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Category: State: QLD

  • Public Service in Challenging Times

    Public Sector, Procurement & Privatisation

    Public Service in Challenging Times

    The Economic and Social Value of Public Sector Work in Queensland
    by Dan Nahum

    Author

    Dan Nahum

    Economist

    Media release



    480,000 Jobs Rely on QLD Public Service, Cuts Would Deepen the State’s Recession

    In times of crisis, governments have a responsibility to their citizens to maintain and expand their role in the economy – for both economic and social reasons. This responsibility has never been clearer than during the current COVID-19 pandemic, and its associated economic downturn. Australians are counting on their governments to protect them from the pandemic, support them through the resulting recession, and play a leading role in rebuilding a stronger, healthy society in the aftermath of this unprecedented catastrophe.

    Moreover, the economic benefits of providing those essential services spread throughout the state economy, supporting jobs and incomes including in the private sector.

    In the context of the upcoming Queensland election, research from the Centre for Future Work shows that in addition to some 331,000 direct jobs providing broader state-funded public services, 150,000 private sector positions depend on the economic stimulus provided by public sector work. In total, some 480,000 positions are supported, directly and indirectly, thanks to the provision of state-funded public services in Queensland. In particular, regional and remote Queensland depends on the public sector as a crucial source of decent, socially valuable jobs, performed by well-qualified people, earning (and spending) middle-class incomes in their regional communities.

    Cutting public sector jobs and wages not only directly affects their own economic fortunes, but also negatively impacts the broader economy through spillover reductions in demand, spending, and production. To dramatise these broader economic consequences, this report describes simulations of two possible three-year austerity scenarios:

    • A one-year ‘freeze’ in aggregate public sector payrolls (considering both wages and staff levels).
    • A one-year 5% ‘cut’ in aggregate public sector payrolls (effected through some combination of wage and staff cuts).

    Over three years, the ‘freeze’ scenario reduces total GDP by a cumulative total of over $9 billion: including the loss of incomes for state public servants, and the resulting loss of income and output in the whole range of consumer goods and services industries which depend on the consumer spending of public sector workers. This decline in GDP translates into the loss of 20,000 person-years of employment in the private sector industries which are hurt by the freeze. Over a similar three-year period, the ‘cut’ scenario would reduce cumulative GDP by $15 billion, and eliminate some 35,500 person-years of employment in private-sector goods and services industries.

    In this unprecedented moment, the maintenance of public services (and supporting the jobs that depend directly and indirectly on those services) is surely a more urgent priority than cutting government spending in pursuit of some illusory fiscal target.



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  • 480,000 Jobs Rely on QLD Public Service, Cuts Would Deepen the State’s Recession

    480,000 Jobs Rely on QLD Public Service, Cuts Would Deepen the State’s Recession

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    With state budget deficits a potential issue in the coming Queensland election, new research from the Centre for Future Work shows that cutting public sector jobs and wages would directly undermine the delivery of essential public services at a challenging time in Queensland’s history. Moreover, misplaced fiscal austerity would also hurt the state’s economic recovery by reducing spending, employment and production in the private sector. These effects would be especially severe in regional and remote QLD, which is most reliant on public service jobs.

    The report, by the Centre for Future Work, finds that for every 10 direct jobs in state-funded public services, another 4.5 jobs are supported in the QLD private sector. This means that these public services support a total of some 480,000 public and private sector jobs across Queensland. Cuts to public services and staffing would impact private sector jobs and incomes, deepening the recession.

    Key Findings:

    • Some 480,000 positions are supported, directly and indirectly, by the provision of state-funded public services in Queensland.
    • This includes 331,000 direct public sector jobs, as well as over 150,000 more positions in the private sector that depend on the economic stimulus provided by public sector work.
    • For every 10 direct jobs in the state-funded public service, another 4.5 jobs are supported in the private sector.
    • Regional and remote Queensland is the most reliant on state public sector workers – both for the services they provide, and as a source of high-quality employment for local residents. State public sector workers account for almost 12% of total employment in remote and very remote regions of QLD.
    • The report simulates two potential scenarios of fiscal austerity in Queensland. It finds that fiscal austerity (imposed via cuts to public service staffing and wages) would cause substantial harm to Queensland’s economy: including cumulative losses (over three years) of $9-$16 billion in state GSP, and the loss of 20-35,000 person-years of employment in the private sector.

    “In this unprecedented time, the maintenance of public services is surely a more urgent priority than cutting government spending in pursuit of some illusory fiscal target,” said Dan Nahum, Economist at the Centre for Future Work and author of the report.

    “By cutting employment and incomes for public sector workers (and the private sector industries which depend on public services for their own markets), misplaced austerity would undermine economic recovery and reduce GDP.

    “A more constructive and effective response to the COVID crisis is to expand the economic and social footprint of government, including state governments – not shrink it.

    “Attacking public sector employment and compensation, just at the time Queenslanders need more public services, not less, would be a major policy mistake.”


    Related research



    Public Service in Challenging Times



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