NSW - the crack head state

Does anyone think it is good policy to give a crack addict more crack in order to cure them of their addiction?

I'm sure there will be some soft-headed crackhead's rights types out there that will think that it is a good idea, and that taxpayers should pay for it. But I'm not so sure that it's the best way to proceed.

Why then is the federal government continuing to bail out the states by throwing billions at infrastructure projects? The states like NSW cry poor and claim that they can't afford them, and trudge (or fly) down to Canberra with the begging bowl. Rudd, like all suckers that think they know better than anyone else, obliges by handing over fistfuls of our cash.

The NSW budget is in a hell of a state, and we can thank 10 years of Bob Carr for that. Whilst he kept the headline rate of public sector pay down to supposedly reasonable levels, he allowed plenty of shifty lurks to go unchecked that have left us with a massively expensive state sector payroll.

I am going to simplify things a lot here, and make assumptions, but my aim is to illustrate a general trend. Let's go with a grossly oversimplified model of how nurses are paid.
We wind the clock back to 1990, and assume that nurses are paid $30,000. We have a single class of nurses, and let's say there are 1,000 of them. They are all classified as "nurse". Total payroll is $30 million.

Fast forward 20 years, and we can expect two things to have happened to this calculation. First, there are more nurses - let's say numbers have grown by 50% to cope with an ageing and growing population. That would increase the bill to $45 million. Second, payrises to cope with inflation over 20 years would have seen a doubling in their salaries to $60,000, giving us a total bill of $90 million.

That is not the bill today though. It is several times that. Here is what happened under the surface to many, many occupations throughout the state sector.

To start with, management positions were massively upgraded. In 1990, a matron might have earned 30% more than a nurse, giving matrons a salary of say $40,000. In 2009, we'd expect that to be $80,000. What happened though is that the position of matron was abolished, and replaced with a coterie of nursing manager positions, all suddenly paying $120,000 or $150,000 or $180,000.

Second, we no longer have plain old bog-standard nurses. We now have a wide variety of specialised positions that also pay a lot more. So whilst there is always a lot of song and dance in the media about each annual pay negotiation for nurses, it concentrates on the pay rate for the bog standard variety, which is always a measely 2-4% increase. What's happened though is that you now have lots of specialty types earning a lot more than the bog standard - remember we assumed that the total nurse population grew from 1,000 to 1,500? Well, let's also assume that all those additional 500 nurses are specialists, and they are not earning the basic rate of $60,000 - they are on $90,000.

Suddenly your salary bill is not $90 million, it's (1000 x $60,000) + (500 x $90,000) which is $105 million. If even more of your nurses specialise, so that we have 500 bog standards and 1,000 specialists, your salary bill blows out to $120 million.

And then we have a wholesale migration of "front line" nurses into paper pushing occupations. The government wants to combat childhood obesity - it sets up a programme and it needs staff. Nurses are needed to produce posters and pamphlets and to staff a hotline and so on. Because it is a special program, it can offer salaries of $90,000. Bog standard nurses sick of dealing with drooling drug overdoses on $60,000 jump ship for a desk with a view, a life in front of a PC designing the next range of colour brochures and a 9-to-5 lifestyle. Yes, we have lots of "nurses" working in the system, in that we have employed a lot of people who are professionally qualified as a nurse, but a huge number of them are no longer actually nursing real live people - they are doing an office job like any other office worker.

Now I am sure those working in the medical profession will kick lots of holes in my assumptions about payrates and so on - they are not meant to be realistic. They are just there to illustrate a feature of the last two decades - the massive growth in passive, back office, paper pushing, highly paid useless services, and the ignoring of front line services. New brochures and a fancy poster are sexy - and launching a new campaign against childhood smoking in front of the media is very attractive to bureaucrats and politicians, whereas standing around in an emergency room at 2am on Sunday morning is not.

I watched this happen in my industry. Position descriptions would be revised in order to bump that position up a few pay grades. New positions would be created with pay levels that supposedly matched those in the private sector (pay level consultants were paid fortunes to analyse private sector pay scales in order to support public sector pay scales).
So that's why if you had say a position of "gardener" on your books in 1990, you now have a position of "plant and grounds maintenance specialist", and although the work is exactly the same, the position is graded several levels higher, and paid commensurately more.

That is really where our tax dollars went. In my particular neck of the woods, I had a boss earning $90,000. A few years later, I had a new boss doing essentially the same thing earning $230,000. A new layer of management positions was created, and the 6 jobs all paid up to $180,000. I shouldn't complain too much, as my salary more than doubled during that period as I jumped from one position description to another, but kept on doing much the same work. My underlings went through the same process, so that by the time I left, some had gone from $30,000 to $80,000 - the same as what my old boss made a few years before. We had only a few more people on the books, but our salary bill was enormously higher.