Wage freeze

The government’s wage freeze will worsen the recession in NSW, according to several economic analyses.

Treasury advice has come to light that acknowledges a wage freeze for NSW public sector workers, including nurses and midwives, would worsen the state’s economic recession.

The advice is contained in an email from Sam Walker,  director of the Treasury’s budget division. The Sydney Morning Herald obtained the email under Government Information (Public Access) Act 2009.

In the email, Walker says he is attaching a pack containing “economic advice that reducing public sector wage growth in the short-run would deepen recession”.

This analysis supports a report by Dr Andrew Charlton of Equity Economics that was submitted to the NSW Industrial Relations Commission (IRC).

The report found the wage freeze was “precisely the opposite direction economic policy needs to be headed to achieve the government’s goal of supporting economic recovery”.

Dr Charlton was a key economic adviser for the Rudd government when it crafted its stimulus package in response to the Global Financial Crisis.

That stimulus was widely credited with keeping the Australian economy stable and growing while most other countries throughout the world fell into recession.

A recent study, The Same Mistake Twice: The Self-Defeating Consequences of Public Sector Pay Freezes, published by the Centre for Future Work at the Australia Institute also questions the wisdom of the wage freeze. It found that freezing pay for essential workers was “not just morally questionable – it’s also a major economic mistake”.

“The motivation for public sector wage austerity seems more ideological than fiscal or economic. Our research shows these arbitrary pay freezes are both unfair and economically counterproductive,” said the report’s lead author, Dr Jim Stanford.

Hospital productivity is up

NSWNMA general secretary, Brett Holmes, says even before COVID-19 put added strain on the NSW public health system, demand was on the rise and nurses met the challenge by increasing their productivity.

Over the last nine years “the increased productivity of nurses and midwives is evident in the government’s own hospital data”, he said.

“Bureau of Health Information reports over the period from 2011 to 2020 indicate significant increases in throughput of patients cared for by nurses and midwives in NSW hospitals, and highlight initiatives such as new models of care to meet service objectives, which also represent cost savings such as reducing length of hospital stays.”

Even before COVID-19 the highest ever number of patient presentations in EDs occurred between October and December 2019.

“Yet, here in NSW we have a state government wanting to penalise nurses and midwives by freezing their wages, to their short– and long–term financial detriment,” he said.

NSW is an outlier

NSW stands alone in the Commonwealth in targeting nurses and midwives to carry the brunt of the economic fallout from the coronavirus.

In Queensland, government legislation is pending to delay a 2.5 per cent pay rise for the public sector this year. But unlike NSW, Queensland is proposing to catch up by paying two increases  next year.

In South Australia, nurses and midwives recently reached agreement on two per cent increases per year over the next three years.

In Victoria, nurses and midwives will receive a three per cent increase in December 2020.

In Tasmania, public sector nurses and midwives received a 2.3 per cent pay rise from 1 December, 2019 to be followed by a 2.3 per cent, a 2.35 per cent, and a 2.35 per cent increase in the following years to 2023.

Brett Holmes says although these governments had a weaker fiscal position than NSW prior to COVID-19, they are “recognising their public sector nurses and midwives and the stimulus their incomes provide to spending in their local economies and their state economies generally”.

He said that in addition to pay increases the state governments in Victoria and Queensland had significantly improved their nurse-to-patient ratio systems since 2015.

“They have made substantial investments in higher nursing staffing and patient outcomes.”

The NSW government argues that the $3 billion in “savings” from the public sector wage freeze will be spent on infrastructure projects to create jobs.

But Brett Holmes says the government has indicated it would simply fast track projects already committed but pay for them out of public sector wages. Very few of these are spread across rural NSW.

“The immediate effect of a pay rise stimulus would be felt statewide as soon as it hits the pockets of nurses and midwives, when the economy needs it, as opposed to infrastructure projects that take time to deliver stimulus. Spending in local communities will be immediate.”