Coordinator-General gets kiss of death after tight budget

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Tasmanian Opposition leader Bryan Breen has trained his crosshairs on Coordinator-General John Perry, arguing the new agency has been a pointless addition to the bureaucracy since it was established in 2014.

In the wake of last week’s state budget, the Labor leader has promised to abolish the office if his party wins government in 2018 and give “the responsibility for attracting and co-ordinating investment” back to the Department of State Development.

Prior to creating the new office and embarking on a marathon 10-month recruitment process which eventually lured Perry (pictured) to the role from New York, the government shut down Invest Tasmania, an agency under the State Development umbrella, and said the new entity would take over its work. Its responsibilities cover major project facilitation, investment attraction and promotion, red tape reduction and unsolicited proposals.

Green told The Mercury his surprisingly early election commitment would save $30 million over 10 years. Under his plan, the department would maintain a presence in Launceston, where the Office of the Coordinator-General is located.

The Opposition has also warned that public sector job losses are likely as a result of Tasmania’s 2016-17 budget, delivered on Thursday, despite Treasurer Peter Gutwein’s assurance that “there will be no new job cuts” required, with a 2% cap on wage rises keeping a significant wage bill under control.

“A key element of budget management is controlling the public sector wages bill, because employee costs account for nearly half of all operating expenditure,” the Treasurer said in his budget speech, contrasting the 2% maximum wage rises with “the current rate of inflation” being around 1.5%.

“This budget provides funding for agencies consistent with our wages policy,” Gutwein said. “It needs to be remembered that even a once-off 1% increase in employee expenses would cost around $100 million across the budget and forward estimates period.

“The Government’s priority is to use its available funding to meet emerging service needs, whilst also providing for modest real wage increases.”

Labor’s warning that further public sector job cuts would occur nonetheless was based on analysis by credit rating agency Moody’s suggesting that “reductions in full-time employee positions would be required” for the government’s economic forecasts to come true. Moody’s thinks the government will struggle to keep average spending growth to 0.6% over the next four years, given it has been 2.8% over the last four:

“Achieving this trajectory assumes public-sector employee costs rise by a low 0.9% a year. Since these projections rely upon wage outcomes of 2.0%, that is in line with the state’s wages policy, reductions in full-time employee positions would be required to meet these targets.”

Gutwein’s claim that this budget gets the state’s finances “back on track” with a $77 million surplus has been criticised as an accounting trick in some quarters, due to the decision to shift two $40 million dividends earmarked for the purchase of new Spirit of Tasmania ferries from the company that runs the service to consolidated revenue.

With revenue from government business enterprises weakening, reduction in allocations from the Commonwealth and stagnating employment growth among the many pressures on the Apple Isle’s budget, the 47% of spending that pays government employees could well come back into the firing line.