Saturday, 31 December 2011

Baillieu Government Cuts 3600 Public Service Jobs

"In the midst of negotiations over an industrial agreement, the Victorian government of Premier Ted Baillieu announced on December 15 that it will eliminate 3,600 public sector jobs over the next two years. This amounts to a 10 percent reduction in the public service."


I am very happy with Ted for cutting 3600 jobs (about 10 per cent) from the Victorian public service. The job cuts will be achieved through voluntary redundancy packages that will effective dangle money in front of public servants, which they can take on the condition that they leave the public service. Some argue that this will remove all the high quality public servants, but I believe this will filter out the greedy public servants who are only in there for the money and power. The public servants who are passionate about their jobs will stay, the ones who are willing to keep working as public servants even though it pays less than an equivalent role in the private sector.

There are some who argue that a desire by the Baillieu government to maintain a surplus is silly given that debt can be good and that most households in Australia have a lot of debt. But this is a poor argument. Just because most households have significant debt it doesn't mean the State of Victoria should have debt. Households have high debt mainly because they need to buy houses to live in. Does the State of Victoria need a house to live in? The State and the individual are completely different. You cannot take the situations of personal finance and apply it to public finance.

In the realms of public finance, the ongoing problems in Europe show that governments should not go into too much debt. The problem with debt is that it creates an additional expense, namely interest expense. Money that could have gone to building hospitals or building roads or funding education is instead wasted because it is channeled instead to paying interest expenses, which doesn't benefit the people.

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