Public Servants are a necessary cost for all Victorian taxpayers but my Council spends nearly half ratepayers' money on staff - and it's hard to tell which ones are delivering services and which ones are shuffling papers.
According to the Parliamentary Budget Office (PBO) Budget Update, published this month (December 2019), employee costs represent 37% of all Victorian government revenue.
The PBO calculates this ratio and includes it in the update because all employers, including the government, need to know how well they can manage the costs of their workforce.
It’s a key indicator of how much revenue companies need to target each year, to keep operating, to grow and make a profit. And staff costs usually increase annually by a certain percentage, and then there are extras on top, such as superannuation, annual leave, sick leave etc. So it’s very important to know what percentage of revenue your staff costs are, and how much they grow each year.
So, the state government’s staff costs represent 37% of the total state revenue according to the BPO.
Maribyrnong City Council’s staff costs are 40% of total Council revenue. That’s total revenue of $143m which includes funds from government grants and revenue from interest on investments.
If I only look at the employee expense to rates revenue, the ratio jumps to 56%.
That’s because employee expenses are $58m and rates revenue is $103m.
Council is a service organisation - so it does rely heavily on labour to provide services for its community.
There are two reasons this ratio is a major problem though.
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Firstly, not all these employees are providing services to residents. There's another $4m paid to contractors on top of these employee costs. Those contractors also supply services such as rubbish collection, and ...well actually I'm not really sure what.
And the second reason for concern is that employee expenses increase on average 3.4% every year.
Under Maribyrnong City Council's enterprise bargaining agreement, employees get a 2.5% automatic pay rise every year and then, every few years, they jump from one pay band to another and get a promotion. Hence the average 3.4% rise in employee costs.
The problem of course, is that total rates are only allowed to increase 2.4% every year, or thereabouts.
With employee expenses at such a large proportion of total revenue, and increasing much faster than rates revenue can increase, the Council is fast running into major budgeting problems.
It is way past time MCC did a major staff review, including effective and useful feedback from ratepayers, to identify which positions actually provide a direct benefit to residents and which do not.
It’s also long overdue for Councils to hire staff on private sector agreements instead of public sector agreements. Under the Local Government Act, Councils are corporations, they should be able to pay staff as other Corporations do
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