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EYE-BALL Guru on – Government Expenditures Part I – Department of Prime Minister and Cabinet – DPMC – STAFFING –

November 20, 2012
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Title:
– Government Expenditures Part I –
– Department of Prime Minister and Cabinet – DPMC –
– STAFFING –
| Author: EYE-BALL Guru | 19th Nov 2012 |
The EYE-BALL Opinion posted a few days ago on the explosion of the DPMC budget from $132 million in 2010 under RUDD,  to well over $600 million by the end of 2011-12 under GILLARD – this represents a 466% increase in the DPMC budget over two years.

On face value this seems an exorbitant excess and prompted a closer inspection of the Budget Reports.  They do paint a picture.

After a few days of extensive research using the Budget Reports provided via the DPMC website – link here – the results make for interesting reading and interpretation.

This post is the first in a series of perhaps 3 or 4 posts on the DPMC Budgets and the outcomes of the research.  This 1st post relates to the DPMC staffing levels, the budget cost of staff to taxpayers, the shifts in their age, their status, their fluctuating number dependent on the PM and their own slant to how they want te DPMC to function, and the productivity gains that provide the incentive to drive the increased salaries paid during a time when the rest of the Nation is doing it tough since the GFC.

DPMC STAFFING Numbers:

[Source Data: The staff numbers presented in the Table below have been extracted from the DPMC Budget papers and have been double checked for accuracy, and are reconciled with several mentions in the preamble and Notes to the accounts.  They are correct as reported.]

Staff Numbers by Divisional/Ongoing Allocation:

[Click on image to enlarge in a new window – click ‘Ctr+’]

There is only one startling statistic arising from the number of staff employed.  In the 2010-11 year the DPMC staff numbers rose from 657 under RUDD to 1090 under GILLARD during her first year in office.

There were two new Departments created under Gillard’s Prime Ministership – Office for the Arts, and Office for Sport, these Divisions created an additional 259, and 43 staff respectively and accounting for 303 of the 377 new staff positions created.  These staff and Division allocations disappeared in 2011-12, and presumably became new Departments and the staff were transferred to that cost centre.

The PM’s Corporate Services Division accounted for another 33 additional staff – and the CHOGM staff numbers increased by 46, both accounting for the difference in the increase over Mr Rudd’s numbers.   Given the comments around that the PM’s office has ‘social media’ minders monitoring blog sites and media stories, the increase to the Corporate services Division can be explained.   Whether it is overkill is another matter.

The increase to the CHOGM staff numbers is warranted given the early estimates around a $300 million budget provided to host the event.   Going back further to previous years would only show annual increases but not really reflect the change to the media cycle and how it dictates policy under Gillard.   This is a major weakness in modern Government – middle of the road policies are popularist driven and poll tested well in advance and you need the staff to do the market research.

As for productivity outcomes – the only measure comes in via poll data and success or failure at the election.   On any scale – worth of an employee in that caldron cannot be measured to a Public Service pay scale.   One interesting note is that consultants feature more regularly on the Budget report than you might think.  More on that in a later post.

Staff Numbers by Age differentiation:

Staff age shift and Staff Remunerations:

[Click on images to enlarge in a new window – click ‘Ctr+’]

  • These two Tables present interesting data – a perspective offered by a friend and agreed with,  talks about the Government propaganda about policy’s to encourage and foster long-term and ‘mature-age’ unemployed persons returning to the workforce.  The Government policy targeted this demographic and the targeting of that 45+ age group seems at odds with the numbers above.

It is a well mentored policy very large on the intent, but the evidence in the DPMC numbers above indicate that there is a reverse downward trend in the employment of the 45+ age bracket.

The Table shows that growth in the less that 25 to 44 age bracket has DPMC staff numbers increasing from 69% under Rudd to 77% under Gillard.   Conversely – the number of 45+ aged employees has fallen from 30% under Rudd to 22% under Gillard.  This is a definite trend and against the stated policies of the Government being an equal opportunity employer.

This statistic requires a response from the Government – and has become one of the many questions that will be sent to the DPMC Secretary/Media advisor seeking answers to questions arising from the research.  My friend has applied for positions within the DPMC, he is 55 and been long-term unemployed, he has recently completed University studies and received ‘distinction’ marks, yet the return letters he has received from the DPMC border on blatant discrimination.

One letter suggested he was disabled … highly defamatory as he is a fully able person.   His career highs include the pinnacle of Financial Markets and Treasury operation during the 1980’s and 90’s and trader in global market derivatives.  He is very smart and would challenge the intelligence of 98% of all his peers… why won’t the DPMC hire him under their policy to hire mature long-term unemployed?

  • Another interesting statistic is the rise in staff turnover to 33% under RUDD when he came to power in late 2007 through the 2007-08 year, and then again in the 2011-12 year under Gillard to above 30% levels.

The 2011-12 number might be distorted by the large reduction of staff from the 2010-11 number to the 2011-12 number – i.e. 1090 down to 720.   This might also be the reason for RUDD’s high staff turnover numbers in his first year as he also decreased staff numbers from Howard’s 2007 655 staff,  to Rudd’s 2007-08 number of 464.

A closer look and the Cost of Staff:

[Click on image to enlarge in a new window – click ‘Ctr+’]

The Average Staff Remuneration – see NOTES Table above.

Under Howard’s last full year in office, 2006-07, his staff numbers of 655 cost the taxpayers $63 million and change.  The per staff member average calculated out at $94k.

Under Rudd’s first term the staff numbers decreased significantly as often happens with a change of Government.   Rudd’s first term year had the cost per staff at $126k per staff member,  indicating perhaps that mainly lower paid staff were let go – i.e. reduced staff numbers from 652 down to 464, reflected staff cost reductions from $63 million down to $58 million.

In the following year when DPMC increased staff from 464 to 617 – Rudd’s first full year of being in charge – the per staff costs decreased from $126k back to $102k.

The 2008-09 year’s total staff costs rose and were again on a par with the Howard ’07 levels of $63 million, be it with 40 odd less staff than Howard had.

In the ensuring 2009-10 staff numbers and their cost rose sharply.  By the end of the 2009-10 year the DPMC staff numbers had grown to 657 from Rudd’s first year total of 454, and the staff costs were back at the $121k per staff member from Howard’s $94k per staff member.  Total Staff cost were at $80 million up from $63 million the previous year.

In June 2010 Gillard replaced Rudd as the PM.  During the 2010-11 year through to 2011-12, the average staff cost again increased from $121k to $152k, after falling off a cliff in Gillard’s first year in office when she increased staff numbers by 63% to 1090.  They must have been mostly junior staff.   The budget staff costs rose from $80 million under Rudd to $110 million under Gillard by 2011-12, with $20 million of that coming in the 2011-12 year.

This budget expenditure represents a 37% increase from when she took over from Rudd in mid 2010.   The cost per staff member also increasing from an average $122k in 2009-10, to $152k in 2011-12, again a reflective increase of 25%.

The RUDD 2008 wage Embargo:

The wage increases over the 2011, 2012 years were far in excess of any wage claims approved in the private sector – and in the post GFC environment, and after Kevin Rudd as PM in 2008 placed an embargo on all Parliamentary wage increases in 2008 because of the GFC and the pressures placed the private sector employers.   Rudd believed the Government should show restraint in the face of the GFC and his parliamentary colleagues agreed with him.

The relative Act wording stated:

Remuneration and Allowances Regulations 2005 – Select Legislative Instrument 2005 No. 308 as amended – made under the Remuneration and Allowances Act 1990:

Remuneration and allowances of Senators and Members of the House of Representatives

(1)   This regulation is made for paragraph 1 (2) (b) of Schedule 3 to the Act.

(2)   For the financial year commencing on 1 July 2008, and for each subsequent financial year:

(a)    the percentage is the percentage of the reference salary which, when applied to the reference salary, reduces the reference salary by the amount (in whole dollars) by which the reference salary was increased by the Remuneration Tribunal for the financial year commencing on 1 July 2008; and

(b)    the reference salary is the reference salary for Band A of the Principal Executive Office classification for the relevant financial year, set out in:

(i)    Remuneration Tribunal Determination 2005/19; or

(ii)    another determination of the Remuneration Tribunal that deals with the reference salary for Band A of the Principal Executive Office classification.

… linked here …

The freeze was welcomed by the House on both sides and the mood of the freeze can be read via ‘The Age’ story below:

Salary freeze for federal MPs


| Author: Michelle Grattan, Canberra | Date: February 15, 2008 | Link to On-Line Story. |

THE pay of federal MPs will be frozen until the middle of next year to set an example of restraint to the community.

Prime Minister Kevin Rudd has also urged business to show restraint in setting chief executive pay, as the nation confronts growing inflationary pressures that caused an interest rate rise this month and may bring another next month.

As part of his declared “war” on inflation, Mr Rudd took the wage freeze to a special meeting of caucus yesterday. It was approved on the voices without dissent.

Only two MPs — Arch Bevis and Julia Irwin — spoke against it. Mr Bevis warned of the danger of interfering with the independent process of the Remuneration Tribunal, and Ms Irwin described it as a “silly move”.

Last night Ms Irwin told The Age that Mr Rudd was “setting an example for bosses to freeze their workers’ wages. They will be able to turn around and say ‘the Prime Minister is freezing MPs’ wages, so we can freeze your wage’,” she said.

Another MP said: “It’s a bit of empty symbolism. It’s interesting coming from a man who’s married quite well,” a reference to Mr Rudd’s wife Therese Rein, who has a lucrative employment business.

After receiving a 6.7% rise last year, backbench MPs currently earn an annual salary of $127,060. The Prime Minister’s salary is more than $330,000.

The Opposition quickly agreed to the pay freeze, with leader Brendan Nelson saying it would send a signal to people doing it tough that “we are doing our bit”.

Mr Rudd told Parliament the Government would make sure that when the freeze came to an end in mid-2009, there would be no clawback of lost money.

He described the freeze as “a modest measure” and conceded it did not of itself solve the nation’s economic challenges or problems.

“But it does, I believe, indicate to the public at large that the Government … is serious about the overall challenge of wage restraint,” he said.

Mr Rudd stressed that the freeze would not flow on to senior public servants.

Urging companies to do their bit, Mr Rudd said he hoped businesses that set chief executive salaries would show restraint this year. Executive wages in Australia have doubled over the past five years — four times the rise in ordinary workers’ wages.

Dr Nelson used the pay issue to press his case to include a question time in the new Friday parliamentary sittings, which are being introduced for private members’ business.

“It’s also important that everyone in the Parliament actually work hard for their money. We want Mr Rudd and his ministers to be in the Parliament every Friday to answer questions.”

Greens leader Bob Brown, who proposed that MPs’ pay rises be pegged to the CPI, said the Greens would move in the Senate to rein in “unconscionable” pay rises in the corporate sector.

With MARIO XUEREB

How this mood changed under Gillard!

One might now think it was a contributing motivator to the events of June 2010 when Rudd was replaced as PM.   This salary freeze embargo was lifted after Gillard came to power, and one wonders what restraint Gillard practised given the sincerity RUDD and the House in general agreed to when they all embraced the freeze in 2008.

The Gillard Salary explosion:

Since Gillard became PM there has been an explosion in MP remunerations.  The RUDD freeze did not ally to Public servants.

The salary expenditure explosion for DPMC staff under Gillard’s leadership has never experienced the annual increases the last two years represent – some 37%.

You will all recall the Government, and with no opposition from the Cross Benches, voted themselves in favour of the 2011 ‘Remuneration Tribunal‘ recommendations to increases the ‘base salary’ for a backbencher from $140k to $185k.  That increase took effect from July 2012, but not before another increase was voted on for another $5k p/a increase also to take effect from July 2012.

The ‘base salary’ increased to $190k – represents a year on year increase of 36%.

The pretence for the increased base salary, and as explained in the Remunerations Tribunal report, was to offset MP’s perks yielded and turned into cash or salaried payments.  I for one have trouble seeing where the ‘perks’ have been trimmed to offset the 36% increased cash pay rise.

If you can find it please tell me …

The explanation given by the Remuneration Tribunal Report for the salary increment in lieu of ‘entitlement’ yield can be read in part below – or the Full Report [all 319 pages] linked here:

Preface

This is the Tribunal’s first Report on parliamentary remuneration and other entitlements since
the Remuneration Tribunal Act 1973 (the Act) was amended to enable the Tribunal, once again, to determine the annual ‘allowance’ payable to members under section 48 of the Constitution.

The ‘allowance’ is referred to subsequently in this Report as parliamentary base salary or,
simply, base salary.

The Tribunal has been concerned, for some time, about the remuneration of parliamentarians and the sources of its various components. For example, in the Overview to its 2007-2008 Annual Report, the Tribunal noted that:

“…there has been no thorough review of the remuneration of parliamentarians for nearly twenty years. In these circumstances, base salary is not only less now than it might otherwise have been, it is also significantly below the level at which it would have been at 30 June 2008, had there been a consistent, sustained, basis for its fixation. I referred to the apparent adverse shifts in relativities between parliamentarians and the SES in last year’s Overview.”

The Tribunal therefore welcomed the announcement, on 8 September 2009, by the then Special Minister of State, Senator the Hon Joe Ludwig, of the establishment of a Committee to report on the reform of parliamentary entitlements.

The report of the Committee for the Review of Parliamentary Entitlements (the CROPE report) was published in April 2010. While this Report takes account of that report’s recommendations, they have not limited the scope of the Tribunal’s approach. The Tribunal made a submission in two parts to the Committee; they are available on the Tribunal’s web site2. However, as a result of the more detailed work giving rise to this Report, including interviews with a significant number of parliamentarians and the consultancy undertaken by Egan Associates, the Tribunal has modified certain proposals from its earlier submissions to afford them greater relevance. These are mentioned later in this Report.

On 30 September 2011, the Tribunal issued a Statement entitled “Remuneration of Federal Parliamentarians”. That Statement included the Tribunal’s view that existing parliamentary
entitlements should be rationalised and separated, as far as applicable, into two distinct
streams, namely:

  • remuneration (those entitlements which provide a personal financial benefit); and
  • business expenses (the costs incurred in undertaking their duties and responsibilities as a parliamentarian).

Assessment of the Work of Federal Parliamentary Backbenchers

That Statement also noted that, as a first step:

“…..consistent with the Committee’s recommendations, the Tribunal is conducting, with the assistance of a consultant, an assessment of the work of federal parliamentary backbenchers so as to establish, first, a defensible basis for assessing appropriate remuneration and, secondly, a benchmark for future assessments.”

An important part of that assessment has been consultations with a range of interested parties, including parliamentarians, officers of the parliament …

… read more …

The Act as amended and pasted above spoke of a wage freeze for all years to come … it lasted four years – all of which has seen the Australian private sector economy continue to be challenged and struggle under the weight of the GFC.

The rest of the western World has walk into a fiscal cliff that has Europe largely bankrupt and unable to help themselves, and America with their own debt anchor about to drag them off their own fiscal cliff as well.

I for one think that the PM, and MP remunerations are too low – but the monkey’s serving in this Government, and across the aisle, do not deserve any increase at all.  They cannot be the best options on offer.   If remunerations were market orientated then the quality of candidate would hopefully improve.  Common – Wyatt Roy was 20 when elected for Longman in 2010 – he is famous for a statement he made in the House:

“… never in my lifetime has the ALP delivered a Budget surplus …’

It bought the House down – not because it was true, but because someone of a your age was giving it to the Government … no disrespect to Mr Roy … but his hand is being held the whole time he has served in this Parliament.   He may at some time in the future become someone of worth and note – but what is his contribution to the House other than but a vote for the Opposition in the House.

If there was someone out there who as PM could lead and create a unison within the Nation, they should be paid the highest wage in the land … but whilst there is the divide between Corporate CEO remunerations and the $500k PM salary … we will continue to get monkey’s lining up for the job.

The other gnawing fact is that most of those serving in the Parliament could not survive in the Corporate world – such was their skill set and ability in the private sector.   Perhaps all aspiring MP’s and Senators should take IQ tests and there be a minimal rating requirement … just a thought … a high IQ does not mean a functioning person …

The ‘Base-Salary’ explanation:

The ‘base salary’ is the salary value for all MP’s serving on the Back Bench without their additional salary received for Committee, or other Parliamentary serving positions.   It is the level all Parliamentary executive, the States and Territories, and Executive Public Servants have their remunerations benched marked upon – i.e the PM receives the base salary plus an additional 160% as her remuneration.

To see a complete list of Parliamentary ‘additional salary’ percentages – use this link, and this link for the PM’s remuneration.

This is extrapolated in the Table below:

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This table does not include Parliamentary allowances relating to travel, car, staffing, telephone, stationary, computers, accommodation, and a host or other perks that were under the review that netted the 35% pay increase earlier this year.

It all makes one ponder how much ‘productivity’ actually matters in Government Departments.  My friend told me that 87% of all new Public service positions are filled from within.  I could say mediocrity breeds mediocrity – but that would be insultative to a vast number of Public Servants who do a great job, as they were trained to do.

The rub is those doing the training are Public Servants as well.   Oops – there I go again disparaging Public Servants … sorry guys.

This critique is not aimed at essential services like Police, Ambo’s, Nurses, and the other essential services.  I primarily refer to Admin and Human resources type staff.

DPMC Wage Scales:

Public Servants are now amongst the highest paid middle management groups in Australia as can be seen in the Table below:

DPMC Staff Executive Pay Scales:

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Over and above the pay scale structures in the NOTES Table above are the revelations outlining the percentage scale increases for the DPMC Executive – all benchmarked off the Remuneration Tribunal scales.   The low-end of the wage scale are talking about 20-40% ranges whereas the upper echelon have 60-80% range increases over the last 5 years of data.

Lends weight to the debate the gap between low paid and high paid staff is widening.

World Economic Comment v Parliamentary wage increases:

Let the facts speak – in a world where the financial security for 4/5th’s of the worlds population is in peril, where food, water and housing security is threatened or gone, where job security across all the Nations in Europe, across the America’s, and encroaching here at home, is on the wane, and where Corporate CEO’s are still talking home $10+ million annual pay packets,  our illustrious Political Leaders have decided that they all needed a monster of a pay bump.

Who among them is worth keeping – who has been invaluable to productivity and policy that has guided this Nation – you could probably count them on two hands – why do you pay the same pay to all the others when the true value of worth is a yes vote for the Party.   Other than that they deal with constituents, some of the time, have staffers to advise them every which way, driven everywhere, have their meals paid for by the taxpayer,  how many of them are really involved with the hard yards of policy?

They farm it out to think-tanks, Treasury, consultants, Legal minds, what do they actually do that make them stand above us all.   Their behaviour in the House is demeaning, their respect toward each other is an indictment, their lies, their public disdain for one another is symbolic of our society.

Who led who where … can we say that the example set by our Leaders are why our society is headed to a complete breakdown.

Not only have this Government pushed this Nation on a path to a fate similar to the rest of the world including:

  • our the debt explosion,
  • the complete abandonment of common sense when it comes to measuring Australia’s labor costs in relation to the rest of the world –
  • all dictated as a result from the generation highs of the A$ value –
  • thus making Australia a most expensive Nation on world trade markets,
  • we produce nothing other than agriculture and resources – all overpriced on overseas markets,
  • when Brazil and African markets come on-line soon, they will offer much more value –

I have no problem with the Prime Minister wrangling $400 million for her pet projects out of a $350 billion budget.   The question is who is she favouring with the payouts?

We know that as Education Minister under Rudd and during the Rudd response to the GFC – some $4 billion was spent on the School Rebuilding program.   $100’s millions of contracts went to Thiess Constructions – the very same Thiess Constructions that were a part of the AWU Union fraud back in 1992-95 that Gillard was involved with.   According to reports, large sums of the Schools Rebuilding program remain unaccounted for.

I just don’t trust Ms Gillard with public monies and I don’t think anybody else should either.   Why hasn’t the Opposition done the legwork on the DPMC budget and picked up what has been presented hereto?  Is a lazy $400 million not big enough?

In the next post – the efficiency of the DPMC is researched and despite the increased staff and costs – the DPMC handles less that what they were doing 5 years ago – questions are asked about the productivity and whether Gillard is empire building..

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The EYE-BALL Guru …

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  1. Gerry Hatrick
    November 20, 2012 at 2:22 pm

    There are 5 surviving former Governor General’s of Australia as at 30 Jun 2012. Sir Zelman Cowan passed away on 8 Dec 2011. Therefore from tables above DPMC list 7 Former Governor Generals as staff. They also state 5 staff aged over 55 out of 720 at year end. The 5 former GG’s would account for that. Could that possibly include the current GG Quentin Bryce?

    This change occurred in 2012. MMMM. Is this blatant and manipulative? As at 30/6/12 there are no actual productive staff age 55 or older!

  2. November 20, 2012 at 10:53 pm

    Well done Guru … eagerly awaitng the next reports as well.

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