Finance Minister Bill English believes new Ministers and departmental CEOs “have done really well” in the line-by-line spending review he called for before Xmas. The process has now ended and the work is being incorporated in new forecasts for the budget. But English reckons the hard work now looming for departmental bosses is to nut out how they will maintain services over the next 3-to-5 years, with no extra money.

There will be “real tensions” within the public sector in the coming pay round, since some groups of public servants will be due for a 4% rise in salary through multi-year agreements negotiated by the previous Govt, and others without those kind of industry deals will get little or nothing. English foresees a collision between public sector expectations and public opinion, which in the current economic crisis won’t be sympathetic to demands for pay increases well above the rate of inflation.

The Govt is insisting there won’t be pay increases without productivity gains, and those facing zero awards will be unhappy where traditional relativities are shot to pieces when some public sector employees are to receive rises of 4% or more as a result of pay deals written long before the global recession hit. English believes many of the dodgy deals were agreed to by Ministers in the previous Govt as a pay-off for support from large public sector groups. The system will have to be sorted out.

 Copyright © Trans Tasman Media Ltd