TASMANIAN STATE SERVICE STRUCTURAL REFORMS AND PRODUCTIVITY STRATEGIES
Mr Speaker, on the 10th of February I released the Mid-Year Financial Report.
The Report detailed the significant financial challenge we face in framing this year’s State Budget. Since then, we have heard in the Federal Budget that Tasmania will lose a further $343 million in GST receipts. That means we have now lost a total of around $1.5 billion in expected GST revenue and State taxes from the Forward Estimates.
Mr Speaker, we are faced with some difficult decisions to ensure we do not go back to the bad old days of the 1990s, when we had spiralling debt, and when we saw funds that should have been spent on services instead being used to pay the interest on that debt. I am determined not to allow the State Budget to slide back into that situation. How we will achieve that will be in next month’s Budget.
But today I want to announce some of the approaches the Government will be taking to help us to return the State’s finances to a sustainable footing while improving the productivity of the public service
In releasing the Mid Year Financial Report, I said the Government would implement a Public Sector Productivity Strategy, with the aim of achieving savings of around $200 million per annum by 2014 15.
Today I will give more detail about some of the ways we will achieve that. Our first priority has been to look at reducing expenses that do not impact on employment, such as phones, cars, travel and the like, but of course those things alone will not be enough to reach our savings target.
In simple terms, the measures I will announce fall into two broad categories. The first set is about making our public service more productive and more efficient The second set is about reducing the cost of our public sector. Both are critical if we are to restore the State Budget to a sustainable footing. The Government’s response to our Budget challenge is not about slashing costs just for the sake of it.
It is about returning the Budget to surplus so we can continue to invest in jobs and services that will ensure Tasmania remains a great place to live. It is about making the right decisions today so we can have a better future.
Mr Speaker, I am aware of the anxiety created in the public service by the Government’s need to find savings.
I know there are many hard working and dedicated public servants who are worried about how these changes might affect them. It is unfortunate that this period of uncertainty has been unavoidable as we work through the issues around the Budget. It is also disappointing that some have chosen to fill the vacuum while we were formulating our response with fear campaigns and misinformation.
In the meantime I have been discussing our approach with key stakeholders, unions, heads of agencies and my Labor and Green colleagues. I hope to be able to allay some of the concerns that have arisen by making it clearer how we will go about making those changes.
That is one reason that I have brought this announcement forward to today rather than leaving it to Budget day next month: so that people will know more about what is happening – and what is not - sooner rather than later.
I value the contribution of our public servants, and indeed strong public services are at the very core of Labor values such as equity, fairness and helping those most in need.
Mr Speaker, I will first outline to the House some of the measures we will be taking to achieve the productivity changes I spoke about – how we will go about achieving greater flexibility and efficiency.
This approach is about making the state service more contemporary, less bureaucratic and more accountable, with a more agile and productive workforce to meet future needs of the Tasmanian community.
Once I have done that I will outline the processes we will follow to reduce our costs. I will not be outlining the exact savings we will be making – that is an issue for next month’s budget.
But I will talk about the process we will follow to ensure employees are treated as fairly, flexibly, compassionately and openly as possible if their positions are identified as no longer being required. The reality is that employee salaries and associated costs make up over 50% of operational expenditure, and in some Agencies this percentage is as high as 70%. Savings in recurrent expenditure of the magnitude that we require can only be achieved through prioritising programs and achieving savings in Agency employment costs.
I have said repeatedly since I released the Mid Year Financial Report that redundancies, and particularly involuntary redundancies, would be a last resort. The measures I announce today are consistent with that approach and will maximise the opportunity for those affected to find new jobs with minimal disruption to their lives.
But where redundancies are required these reforms will ensure affected staff are treated fairly through a clearly understood process. Two of these measures will require legislative change but in large part they are entirely consistent with existing powers and processes
Although they will not be part of the Budget legislation, I will be asking members to agree to the necessary amendments to the Tasmanian State Service Act during the Budget session.
Independent State Service Review
Mr Speaker, one of the key steps we will take to address the productivity of our public sector relates to the longer term governance arrangements that should apply to State Service employment.
The State Service Act 2000 underpins all employment in the State Service and establishes governance, employment and structural arrangements for the Tasmanian State Service.
It is time to review these arrangements to guarantee the State Service remains able to meet the challenges of the future.
There are concerns about some aspects of the current arrangements including:
• The clarity of lines of authority;
• Support for contemporary workforce management, which allows for flexibility to
respond to service delivery, program or policy changes; and
• The number of jurisdictions involved in appeals and reviews
(e.g. State Service Commissioner, Tasmanian Industrial Commission,
Integrity Commission, Anti-Discrimination Commission).
Mr Speaker, these are concerns that have been raised with me in my discussions with unions, agencies and other key stakeholders and I believe we must address them if we are to make our public sector the best it can be.
So today I announce that the Government will commission, through our usual procurement processes, an independent review to examine:
• Employer role responsibilities;
• The State Service Commissioner role and responsibilities;
• Head of Agency roles and responsibilities;
• Tasmanian Industrial Relations Commission roles; and
• Appropriate grounds of appeal and the correct jurisdiction to determine appeals.
This review will involve consultation and discussion with all stakeholders, including staff, unions and other relevant bodies. In addition the reviewer will be asked to provide recommendations and propose a way forward which may involve amendments to the State Service and Industrial Relations Acts.
State Service Amendment (Performance) Bill 2011
Mr Speaker, improving productivity is essential if we are to maintain a high level of service in the key front line areas – like health, emergency management and education - on which we all depend.
Following consultation with agencies and key unions, the Government has determined that performance management, including dealing with underperformance, is a critical component of a Tasmanian State Service “reform agenda” to improve the efficiency and productivity of our public sector.
It was also accepted that an authority is required within the legislation to enable us to assist those employees who are struggling or unable to perform the tasks required of them. Most of us want to know if we are not performing to the expectations of our employer, and we need to be given the feedback and the opportunity to improve.
It is the Government’s duty as a responsible employer to work with staff to ensure they can perform to the best of their ability, which is good for their morale and career prospects, and obviously a boost for productivity and the quality of service we provide to the public.
We have a responsibility to strengthen our performance management processes, including better training for managers, and indeed that is an issue that unions have raised with me as a way of ensuring staff are given the feedback they need and deserve.
In response, I will be introducing the State Service Amendment (Performance) Bill 2011 to amend the State Service Act 2000 to enable more active management of both performance and underperformance of state service employees.
The amendments will also provide a proper authority for the termination of those employees who after support is given are still unable to perform their duties effectively. It is important that this legislation be introduced at this time to distinguish between this and processes involving surplus employees.
These changes are not a ‘backdoor’ way of sacking people to reduce costs. They are about ensuring our public sector is working efficiently and effectively and providing taxpayers with value for their money. But if at the end of the day some individuals cannot meet those expectations we need a fair and open process to work through.
The provisions of the amendment will ensure that agencies adhere to “due process” (natural justice) in cases involving termination and provide authority to the Minister administering the State Service Act to ultimately, after due process, terminate employment of under-performing employees.
Workforce Renewal Incentive Program
Mr Speaker, I have already announced the implementation of a Workforce Renewal Incentive Program.
This program provides an incentive (of up to $20,000) to allow staff to separate from the State Service in certain circumstances, and gives us the opportunity to gain new skills and capabilities in the workforce.
The Program will allow Agencies to renew their workforce and maintain a balanced workforce profile to meet their priority objectives.
The Workforce Renewal Incentive Program is about ensuring the State Service has the right skills profile to meet the challenges of 2011-12 and beyond.
This approach has already been successfully implemented in the Education Department, allowing us to help renew the teaching profession and provide more opportunities for graduates.
Mr Speaker, I now want to turn to the reforms that relate to reducing the cost of our public service.
These changes go to the processes we will follow in seeking to reduce our costs, and how we will attempt to minimise the disruption to the affected individuals in the process.
It is clear that we will not be able to maintain public service employee numbers at the current levels – it’s just not sustainable. Recognising this situation, the Government will put in place a range of measures designed to support Agencies in managing reductions in employee numbers.
As I have consistently said, redundancies will be the last resort. And if we do have to offer redundancies, they will be targeted and limited to positions that are no longer required. We will not be offering mass redundancies because they are too costly and they are not strategic.
Invariably when you open redundancies to anyone who wants to go you lose skills and experience that you did not want to lose. So, if we identify that a position is no longer required the first step we will take will be to see if the person in that position can be redeployed to a vacancy within their own agency.
Each agency has already implemented internal vacancy management measures. These will ensure that each position that becomes vacant will be fully reviewed before any recruitment process is started to determine:
• If it is essential for the position to be filled;
• If the classification level of the position is appropriate; and
• If there are any surplus employees within the agency able to fill the position.
Internal agency vacancy management also encompasses other strategies such as:
• the timing of filling the vacancy;
• the ability of the position to be filled on part-time or job-sharing basis;
• natural attrition following normal separation (abolition of funded vacancies);
• restructuring within Agencies where programs or services are to be discontinued;
• reviewing the need for specific fixed term employment;
• reassignment of duties to existing employees (within the Agency);
• increased approval of leave without pay applications;
• increased approval of secondments to organisations outside the State Service (where available);
• increased use of flexible working arrangements, such as part time employment; and/ or
• workforce re-profiling and utilisation of the Workforce Renewal Incentive Program that I mentioned earlier.
Mr Speaker, if a member of staff who is surplus to requirements cannot be redeployed within their own agency the next step will be to see if their skills can be used in another agency.
I will be issuing a Ministerial Direction that details procedures to manage inter-agency vacancies. The Direction will ensure that there is a whole of government approach to matching surplus employees with vacancies that exist across all agencies.
It is essential that there is a consistent and coordinated approach to these strategies and the Public Sector Management Office (PSMO), within the Department of Premier and Cabinet is to be the single contact point for matching surplus employees and vacancies.
Where a Head of Agency is unable to identify suitable vacancies within the agency, he or she may recommend to the independent State Service Commissioner, who will oversee the process, that an employee be made available for redeployment in accordance with section 47 of the State Service Act 2000.
In the case of a Senior Executive Service (SES) officer, the Secretary of DPAC is advised.
Employees and officers accepted as surplus may be considered on a suitability basis for transfer to vacant state service positions in other agencies. Assessments of suitability will be undertaken by assessment panels established by agencies for that purpose. The purpose of a suitability assessment is to determine whether the referred employee/officer can satisfactorily carry out the duties either immediately or within a reasonable time given appropriate training and experience.
External placement of surplus employees
Mr Speaker, the next step if staff who are no longer required cannot be redeployed within government will be to see if we can assist them to find work externally.
The Public Sector Management Office will explore career or specific job opportunities external to the Tasmanian State Service for surplus employees and officers, including permanent and fixed term placements. The terms and conditions of any external placement will be negotiated with the relevant parties in accordance with Section 46 of the State Service Act.
PSMO will also establish a schedule of preferred providers that may be available to assist surplus employees. These will include, but not be limited to:
• Career Planning;
• Job search;
• Counselling (Employee Assistance Program);
• Financial management;
• Superannuation; and
Agencies may refer surplus employees at any time to the above support services and will, in consultation with their employees, decide the appropriate provider, type and level of advice to assist the employee.
Targeted voluntary redundancy arrangements
Mr Speaker, the Government is currently reviewing its targeted voluntary redundancy arrangements, and I would hope that these, combined with our vacancy control and redeployment measures, will help to minimise the need for any involuntary redundancies.
As I have already said, the emphasis of these arrangements will be on specific targeted redundancies within identified programs, rather than a general offer of voluntary redundancies across a range of program areas, as has been the previous approach.
This will better align our voluntary redundancy arrangements with the structural reform and productivity strategies required to meet our Budget task.
The renewed arrangements will also be designed to:
• place greater onus on Heads of Agency to consider and exhaust other options before offering voluntary redundancies;
• ensure greater emphasis on justifying the cost/benefit of voluntary redundancies before offers are made;
• improve flexibility by incentivising redundancies where other alternatives have been exhausted and early voluntary separation is both desirable and cost effective; and
• minimise the need for involuntary separations.
Changes to Section 47
Mr Speaker, currently the Tasmanian State Service Act provides for a twelve month redeployment period for employees declared as surplus under Section 47.
After much discussion within Government and Cabinet this period was considered to be too long. The Government did consider moving to a three month period but it was agreed that this was too short to allow all options for employees to be redeployed to be explored.
As a result, the Government intends to introduce an amendment to section 47 of the State Service Act which will limit the maximum redeployment period to six-months.
Some other jurisdictions do not specify any redeployment period for surplus employees, though they do require genuine attempts to be made to redeploy surplus employees before termination occurs.
Industrial precedent and decisions in Industrial Tribunals require that an employer demonstrate that redeployment attempts have not been successful, or are not available.
A six-month period is reasonable for inter-agency and alternative strategies to be properly explored. In some cases, particularly for an employee with highly-specialised skills and employment needs, the likelihood or otherwise of redeployment would be established well within this timeframe.
A six-month period appropriately balances redeployment requirements and the costs of continued employment. A longer period of uncertainty also has a negative impact on the employee and the workforce generally.
Mr Speaker, once all of the options I have detailed have been exhausted the very last step we may be forced to take is involuntary redundancies.
I can inform the House that the Government will not be seeking to amend Section 44 of the State Service Act to allow for involuntary termination on economic and operational grounds.
I recognise that some stakeholders were concerned that we might have chosen this path because they feared it could lead to widespread and abrupt redundancies without the type of redeployment options and voluntary processes I have spoken about today. This was an issue of particular concern to unions and my Labor and Greens colleagues.
Instead, if required we would seek to achieve the savings required through the existing provisions of Section 47 of the current State Service Act, which was introduced in 2000 by the Bacon Labor Government.
Section 47 provides for termination after it is has been declared that suitable redeployment has not been available through the various processes I have detailed. Previously, it has been unclear under Section 47 whether an involuntary redundancy package should be made available after this declaration is made.
To ensure there is no longer any doubt, the Government has agreed that, should this stage be reached, after the opportunity has been given to take a voluntary redundancy or pursue redeployment options over six-months, the affected employee will be entitled to a redundancy package.
This package should reflect a balanced and reasonable approach based on the need for “fair” treatment of our employees while recognising the financial benefit that accrues through having had a guaranteed six month paid redeployment period.
The package will contain a minimum payment consistent with the Targeted Voluntary Redundancy Arrangements. The package will also contain a ‘years of service’ payment.
The difference between the package for a ‘voluntary offer and acceptance’ and an involuntary redundancy will need to take into account the benefits that accrue to an employee who remains on redeployment for the full 26-weeks.
We will finalise the details of the involuntary redundancy entitlements following further discussion and consultation with the Unions.
In conclusion, Mr Speaker, the current fiscal situation means the Government is no longer able to meet its budget targets, and we risk moving into an unsustainable position if action is not taken.
Improving the efficiency and productivity of the state service, and reducing our costs, are key strategies we will be implementing in the coming months. But this is also about strengthening our public sector so it can better perform its key role – providing services to the Tasmanian community.
It is important to remember that the majority of employees will not be affected by decisions that identify programs that are no longer required. But I am very conscious that the changes we need to make should be done fairly and openly so we can minimise concerns among staff and the impact on the affected individuals.
That is why I have detailed today the measures we will be implementing and the processes we will be following, and I will ensure that all of our public servants are made aware of what we will be doing.
And I hope that by releasing more details about the direction we will be taking we can allay some of the concerns and fears that have arisen in recent weeks, and we will continue to work with staff and unions as we work through this process.
I believe these changes will lead to a more productive and efficient public service. They will reduce the Government’s costs at a time of financial pressure, and they will do so in a way that gives affected staff the best chance of finding alternative employment. And for employees who find themselves in areas where the positions they occupy are no longer required, it is critical that the alternatives available to them should be fair and clear.
I believe the range of measures I have announced today will help us to achieve all of these goals as we negotiate the difficult times ahead.