14 March 2012

Spin on local government wages nothing but smokescreen for reforms

“Claims that the local government wage bill is contributing to soaring debt is incorrect and nothing more than a smokescreen to usher in far-reaching reforms, says the PSA, the public sector union.

Calculations by the PSA show that since 2003, local council staff have had a pay increase of 26% - around 3.2% a year – virtually the same as workers in the private sector, which has had a 24% pay increase – around 3% a year. Inflation over the same period was around 26 percent.

“While the inflated salaries of some local government CEOs and the use of consultants do need pegging back, Local Government Minister Nick Smith’s claim that wages generally in the sector are contributing to soaring local government debt is wrong,” says Brenda Pilott, PSA National Secretary.

“There is little difference between pay increases in the private, local and central government sectors over the past eight years. The findings of the authoritative Rates Inquiry five years ago still stand - wages are not a significant driver of either expenditure or of rates increases.

“As usual with this Government, workers are being used as a scapegoat. As a proportion of local government expenditure employee costs - including chief executive pay – amounts to 23 percent. As a comparison, IRD’s expenditure on its employees is 63 percent.

“Spinning a line about council workers’ wages is Nick Smith’s way to justify far-reaching reforms in the sector that would rob local councils of much of their responsibilities and of their ability to invest on behalf of their communities.

“The big ticket costs for local government bodies are capital expenditure ones and many are using borrowing to upgrade crumbling infrastructure.

“As Dr Michael Reid, Principal Adviser, Local Government New Zealand said in a recent letter to The Listener, debt is an internationally accepted way of funding long term infrastructure plans and spreading costs over future generations to ensure that the present generation doesn’t pay more than its share.

“Nick Smith intends to rob local bodies of their responsibilities and ability to raise funds and it’s New Zealand communities that will suffer. Communities won’t get more for less, they’ll get less for less; much less,” says Brenda Pilott.

ENDS

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