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Hanging out each others' washing

By Mikayla Novak - posted Wednesday, 17 April 2013


The statistical evidence also tends to belie claims by governments and trade unions that harsh, deep cuts have been made across every part of the public sector since the onset of the global financial crisis in late 2008.

Since the GFC employment in public sector industries have risen by about 406,000 people, with health care and social assistance leading the charge with an extra 269,000 people employed in that industry alone followed by education with an extra 78,000 jobs.

While there is now some belated evidence of job cuts in public administration and safety over the past twelve months, with about 19,000 job losses nationally, the education, health and social assistance employment continued to rise with an additional 101,000 jobs.

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The relative enlargement of public sector employment has profound consequences for the future robustness and competitiveness of the Australian economy.

Since government cannot produce anything of its own accord, but relies upon the private sector to empower its capacity to forcibly redistribute resources, extra taxes paid by the private sector to hire public sector employees reduces the employment creation potential of the private sector.

The perceived security provided by a public sector, which does not rely upon pleasing taxpayers for its very survival, appeals as a drawcard for many of the government's employees, exacerbating skills shortages faced by the private sector especially for white collar professionals.

Finally, additional public sector employment can retard private sector jobs growth because some government employees are charged with implementing and monitoring growth‑inhibiting taxes and regulations, whilst others deliver services at lower levels of efficiency than if they were delivered by the private sector.

Public sector jobs growth, particularly in the 'new commanding heights' of education, health and welfare, has proceeded on its merry way, irrespective of the economic weather, whilst major productive sectors have struggled to maintain their jobs base in an underperforming post‑GFC Australian economy.

A significant reduction in public sector employment, founded upon critically assessing the economic merits of functions and activities presently undertaken by government, remains a meritorious strategy for reform‑minded governments to promote long term economic growth and productivity.

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It is about time that the jobs growth pendulum swings the other way.

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About the Author

Mikayla Novak is a Research Fellow with the Institute of Public Affairs. She has previously worked for Commonwealth and State public sector agencies, including the Commonwealth Treasury and Productivity Commission. Mikayla was also previously advisor to the Queensland Chamber of Commerce and Industry. Her opinion pieces have been published in The Australian, Australian Financial Review, The Age, and The Courier-Mail, on issues ranging from state public finances to social services reform.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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