Death by a thousand cuts: how governments undermine their own productivity | OCCASIONAL PAPER

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Death by a thousand cuts: how governments undermine their own productivity

A new report by Centre for Policy Development (CPD) public service research director Christopher Stone and industrial relations policy expert Kathy MacDermott finds that blind, across-board-cuts reduce productivity, stifle innovation and damage government institutions.

death by 1000 cuts illustrationRising expectations of public services cannot be met in the face of blind, across-the-board cuts. This report examines recent cuts in the Western Australian and federal public sectors, and highlights some long-term problems resulting for the Commonwealth, WA, and other states and territories.

Many governments in Australia and internationally are choosing to “avoid responsibility” for service shortfalls when making budget savings, by applying across-the-board cuts rather than identifying the services which should be reduced or ceased.

Kathy MacDermott points out that staff engagement itself is a key factor in raising productivity, but that engagement is eroded by government rhetoric which denigrates the public sector in an attempt to justify cuts, and by the cuts themselves’ increasing workloads on remaining staff.

Chris Stone said his research shows the approach to be, “ultimately self-defeating. Not only are the cuts affecting services, they are causing long-term damage to the institutions of government…”

Cuts can exacerbate challenges already affecting workforce capability in the public sector, such as an ageing workforce wherein 23% of WA public servants will reach retirement age in the next 10 years. Skills shortages are becoming apparent in areas such as IT, where recruiting skilled staff is now a problem. The small size of most rural agencies allows less flexibility to absorb across-the-board budget cuts meaning salaries are hit harder in remote areas. The median public sector salary in WA regional areas is $5,554 lower than those in Perth, making the attraction and retention of skilled staff difficult.

The paper identifies some undesired consequences of indiscriminate cuts, such as:

  • loss of workforce knowledge and skills
  • loss of productivity and innovation, due to reduced engagement, lack of resources and time
  • loss of trust and confidence in public sector institutions.

The report argues that ineffective services and less engaged public servants can lower the popularity of the government in power, hamper the enforcement of laws and regulations, and reduce popular engagement with the democratic process.

Death by a thousand cuts gives recommendations to avoid across-the-board cuts, increase public sector productivity through enhanced employee engagement; reduce the loss of corporate knowledge by improved recruitment and staff retention; protect rural services from staffing problems and disproportionate effects of cuts; and encourage innovation by facilitating input from skilled staff. A ‘blunt’ instrument’ method of across-the-board cuts that does not acknowledge the issues at hand will produce budget savings only in the short term, and will create significant long term problems.

Download CPD-OP30_Death by a thousand cuts