By Mark Stone
Yesterday’s Victorian Budget Update and accompanying announcements about the need to downsize the public service shows the difficult task ahead for the Victorian Government.
The update showed that Victoria is on track for a surplus of $147 million this financial year. This will go a long way to helping the State retain its AAA credit rating and is a solid result in the face of a challenging economic environment.
The surplus announcement is welcome, but there is little margin for error.
Also announced was a plan to shed 3,600 public servants. VECCI has called for a reduction in back office public service jobs for some time.
The public service grew too large during the 2000s, with numbers rising by 37 per cent between 2000 and 2008, the biggest increase of all the States.
As experts on the State Government’s own Independent Review of State Finances panel recommended, unless state budget pressures are reduced, the risk of further increases in debt levels will intensify.
This is problematic when there is a need to fund infrastructure for a growing population and keep Victoria’s tax regime competitive.
The State should now conduct a wide-ranging review on the efficiency of back office public service roles, with scope for privatisation, outsourcing and removal of duplication.
While we welcome greater consistency in the treatment of WorkCover in terms of the State Government’s dividend policy, it should not endanger Victoria’s low WorkCover premiums.
This is especially the case given the Treasurer retains some discretion over the amount of the dividend to be paid by WorkCover.
