We have Labor governments in each of our states and territories. According to the AFR editorial this morning (subscription only) the expenses of these governments in recent years have risen by an average of 7.5% per annum.
Most of this has gone on extra wages for public employees. In 2006-07 wages growth in Queensland will be 12.4% while in NSW and Victoria it will be 5.5% and 4.4% respectively. Teachers, nurses and police account for a fair portion of this increase but burgeoning bureaucracies add their share.
These trends reflect ties between the Labor Party and the union movement. You can see this in NSW where an election is due in March and where the police association are demanding another 3000 members. Against Treasury advice the NSW Government will provide an extra 750 police at an annual cost of $69 million. The nurses and teachers are always after more members and higher wages divorced from productivity gains. Indeed the ratbag Victorian teachers union has demanded a 30% increase in wages over 3 years without - of course - performance testing.
Of course governments should award such hefty gains only when unions agree to substantial workforce reform. But to quote the AFR this is not happening:
'State governments also cause themselves problems by resisting the concepts behind the federal government's WorkChoices policies and legislation. While the commonwealth wants to emphasise the contribution that individuals make to the workplace, state ministers - under the influence of unions - prefer to treat all workers equally, even though the value added by individual employees differs markedly.'
The states and territories have the capacity to squander the benefits of the current resources boom just as the commonwealth can. The Labor Party dinosaurs running state and territory governments are currently held in check by the commonwealth. What a disaster it will be if a Labor victory federally meant Rudd-style support, for an antiquated industrial relations system, was to give additional licence to the spendthrift states.