Public Sector Reform Essential

The $3.9m to be provided by the Commonwealth will provide little respite for the struggling Norfolk Island private sector. In the meantime the public sector continues to remain a safe harbor in these difficult times. Part of the rationale for this is that public sector wages trickle down and thus provide a degree of stability in our fragile economy. 

That argument can only be sustained for so long. 

All around the world, in Ireland, USA, Greece, Spain and France to name a few, governments are taking the hard decisions to trim public sector costs understanding, as they must,  that if government expenditure grows, or remains static, and public debt rises while revenue derived from the private sector shrinks, the outcome is inevitable.

The Norfolk Island Government has obviously come to the conclusion that the current model of government and its attendant administration cannot be sustained.

 

In seeking a bailout, Greece and Ireland, have acknowledged the need to restructure their respective administrations and this will in all probability play badly for them domestically when next they go to the polls.

In Bloombeg Business Week 04/12,   Ken Wattret, chief euro-area economist at BNP Paribas in London, wrote;

“Good news in the short run does not mean problem solved,”. “As we saw with Greece, securing financial support does not eradicate the underlying problem: the need for multi-year fiscal austerity to win back the markets confidence over the outlook for the public finances. That is going to be tough.”

In most OECD countries, the size of public sector employment today represents between 5% and 28% of the workforce . The Norfolk Island Census does not differentiate between public and private sector employment, conservatively though one could say, that Norfolk is at the high end of this range, if not beyond it.  
Any downsizing of the public sector is likely to impact on future election outcomes. 
It is that reality which retards action on the part of our politicians as much as the very real conflicts of interest present when friends, relatives and partners are effected by any tough decisions.

The unavoidable fact is that unless the private sector grows or the Commonwealth becomes extremely magnanimous the Norfolk Island public sector  is set for a serious downsizing.

At some point NIG will need to establish what is the core business of government and set about the task of re-engineering itself.