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‘Frontline’ cut for phantom savings

Written By: - Date published: 2:00 pm, July 8th, 2009 - 8 comments
Categories: national/act government, unemployment - Tags: ,

MAF Biosecurity is set to cut 60 jobs – 30 of them filled. It claims the fall in imports means it’s over budget and doesn’t need so many staff. I’ve got a few problems with that.

Let’s assume these 30 workers about to get the sack are on the average wage ($48,000). The savings from firing them totals about $1.5 million a year. Bit more for related costs saved too, offset at least in part by redundancy payments that will total hundreds of thousands. Let’s call it $2 million in savings.

Well, the Government cut $2 million from biosecurity in the Budget. So, let’s not blame falling imports here. It’s the Government that cut these jobs (responsible minister David Carter was one of three ministers who refused to front on issues core to their portfolios on Morning report today).

MAF says that biosecurity won’t suffer because there are excess staff now.

Yeah, now, maybe. But Treasury projects that imports will be back to 2007/08 levels by 2011/12. It takes two years (and tens of thousands of dollars) to train a biosecurity officer. So, they’re going to have to start hiring again within a year of firing these workers. If they don’t, they’ll end up unable to meet demand, biosecurity will suffer and they’ll end up paying out more in over-time. More training, more overtime, less experienced staff – there goes your savings up in smoke.

So, it looks like a border-line if not just dumb decision purely from Biosecurity’s point of view, one brought on by the Government’s Budget cuts. Now add the wider costs to the government and the economy:

30 more people out of work means lower tax take and higher benefit payments. Assume they were on the average wage and half go on the dole – you’re looking at hit of about $450,000 to the government’s books. That’s without counting the multiplier effect of their reduced spending sending other people out of work and on to the dole queue.

On top of that, this is a cut to New Zealand’s ability to screen for dangerous organisms that could have devastating effects to our economy. better to keep on the extra staff and do an even more thorough job while imports are down than chase phantom savings at the expense of jobs.
– Marty G

8 comments on “‘Frontline’ cut for phantom savings”

  1. Ron 1

    What is it with these guys failing to front? Again I think NatRad and the other outlets outta be persuing them more. The problem is if Carter doesn’t front there’s a different story tomorrow and he gets away with it.

  2. outofbed 2

    Yes I was talking to a MAF guy yesterday who said that they all had to reapply for thier jobs He wasn’t happy, seems like its going to be smaller places like say Napier where the cuts will be. Agreed a bit short sighted
    I told him I didn’t vote for them (Nats) He went a bit sheepish and said that It was meant to be a ‘cap’ on public servants, not a cut.
    He seems to have made the same mistake as lots of others in believing JK et al in the election campaign.

  3. Zaphod Beeblebrox 3

    Good post, heard the same thing on the Sean Plunkett interview with the MAF manager this AM. He was asked what would happen once imports came back up in two years (which must happen, unless treasury don’t believe their own figures). said by then there would be productivity improvements??

    Obvious follow up question would be what sort of improvements? New Technology? Better training? more qualified staff? More flexible rosters? Unfortunately no follow up q’s.

    All these things also will cost money. Not to mention the high costs of retraining which is inevitable, surely MAF does not plan on hiring anyone for the next decade.

  4. Oliver 4

    I’ve spent 4 years working at our international airports and can totally assure you that when passenger numbers drop less MAF Officers are required.

    It’s pretty simple, MAF officers Xray or search 100% of all baggage of international flights
    Very simply, when passenger numbers drop less staff are required.

    Also, MAF could’ve saved plenty of money over the last 4 or so years, they’re uniform changes and rebranding cost plenty wiithout achieving anything.

  5. gotham 5

    I don’t disagree too much with the border security/agricultural risk arguments for retaining these staff but I think your economics are sloppy. Can you explain the logic behind your economic argument? Hows it a hit to the governments books if the government was paying them x in salary and now pays them half x in dole payments.

    And can you quantify the multiplier effect? Its pretty easy to make a sweeping statement like that – in reality I think you mis-state the effect of public spending which has to be taken from elsewhere in the economy or borrowed (negative multiplier there if you like) which offsets the maybe positive multiplier you claim here. If the alchemy was that simple the US and UK would be booming now.

    Rational expectations will mean a multiplier effect is much lower when spending borrowed money. That’s why stimulus packages don’t work well when times are tough – people don’t spend the money – it is used to reduce debt or is saved. I think you’d be hard pressed to come up with any multiplier effect greater than about 1.2 anyway for this type of net spending – if that. And multiplier effects don’t magically create more revenue to the govt – they may create more GDP but not necessarily a corresponding increase in govt revenue – think how GST works for instance.

    I can buy the argument that if MAF needs to re-resource two years down the track there is a cost to that, but I think you’ll find the gummints argument is that by definition that will occur in a time when growth is up, hence revenue up. And lets be honest – we aren’t talking about especially highly skilled staff here – staff will be relatively easy to find, 3 month training course and you are in business again.

  6. Swampy 6

    Is there any way of deleting a comment?

    [lprent: Only by asking a moderator after the editing is done. Usually just e-mail one of the addresses in contacts ]

  7. Swampy 7

    Do you work for the PSA, sounds like the sort of line they would use.

  8. Scribe 8

    Marty,

    So you concede there wasn’t enough work now for these people? And yet you think they should have been retained anyway? What do you suggest they would have done? Sudoku?

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