Monday 22 June 2009

Estimates Committee B (O'Byrne) - Part 1


Mr FINCH - Where will that figure of 271.11 be in 12 months' time?  Where would you want it to be, with the savings that the Government is looking at across the board, with the 800 less?

Ms O'BYRNE - We would want it to be about the same.

Mr GADD - Absolutely.  We are already trying to push more effort into the frontline, and where we have to take the haircut will be taken out of the non‑frontline areas, like head office.

Mr FINCH - Are they in this figure of 271.11?

Mr GADD - They are in the total of 271.

Ms O'BYRNE - There will be savings across the amalgamation of the services, and that will depend very much on where people go.

Mr FINCH - Is there not a commitment to all departments to shed some of the workload?

Ms O'BYRNE - But that can be done and the position could still be there.  It can be done by vacancy management, it can be done by backfilling.  We have a lot of people who have looked at reducing their hours, so that provides a saving for us.  It does not mean the loss of a position but it does mean a change.  Having said that, (a) there are only some areas where that is possible and (b) it is not always possible for the individuals themselves.  If you are in a financial position whereby you can lose some hours and you make that decision, that is fine.  If we require you to do so and you cannot meet your mortgage payments, then we have not helped anybody through the process. 

For instance, I want to still have those positions of rangers on the ground.  If the Greens' plan came to fruition and we made all of them take a cut of five hours per week, I would have to backfill them because I still have to have people there.  I would still have to staff the visitors centre offices and all of those things. 

Where we do manage these, hopefully it will be primarily through vacancy control or administration.  I cannot give you an absolute.  I would like it to be the same.  I would imagine there would be some fluctuation but I do not think it would be huge.

Mr GADD - To be honest, we might have to lose a few positions to get there.

Ms O'BYRNE - But we are trying every opportunity first.

CHAIR - Have you already asked your department, as it stands now, to look at some reductions in numbers, other than ‑

Ms O'BYRNE - We have the voluntary redundancy program that is in existence now.  Before that, we were asking staff for ideas on savings.  I am not one of those people who think I have the answer to everything.  I think most people on the ground who work in their own environment can often identify savings that we would not have thought of.  As a result of that, we have had a few people say they want to take six months leave without pay, because they have a great opportunity and they want to do that, so that is a saving.  We are working with staff on that. 

The additional complication for us is that we are also going through a transition phase, and that takes a little bit of time and we are working with people through that.  So we do not have all the details at the moment.

CHAIR - Would you expect, because of this transition phase for the department, that it will take longer for any savings to come through?

Ms O'BYRNE - The new departments will be formed on 1 July.  What is clear is that there will be savings, but they do not all have to come from mine, they can come from the agencies we are realigning with, and I am not in a position to comment on the staffing arrangements within those.

Mr GADD - We set a lot of strategies in place in November last year, so we were very well positioned to meet the Budget savings strategies anyway, with the existing strategies.  We have achieved on them and we will continue to do so going forward.

Ms O'BYRNE - When we asked staff to come up with savings, they came up with more savings than we needed.  This is not something we have done only because of the Budget; people came up with incredibly good ideas.  We have made a number of savings already through that: that is vacancy control, looking at the hours that you work, looking at leave without pay, looking at some of the programs they run, whether they can be done more efficiently. 

When we say we have to lose a certain amount of positions, it is those positions or equipment.  We try to find savings that maintain jobs.  We have to provide a set of services, there are services that we have to continue to provide.  But, having said that, we have an obligation to protect as many jobs as we can.  In an area such as Parks, it is very much the frontline person that they see.

CHAIR - Before we go to Mr Wing, would you suggest that the department has been living beyond its means for too long, if they can come up with savings of more than what was asked for?

Ms O'BYRNE - Given that the savings have meant people making huge personal changes to their own circumstances, I am not sure that is something the department could have done before.  They are asking that you can manage in shorter term bursts.

Mr WING - When they came up with more savings than they needed, did you accept all those recommendations?

Ms O'BYRNE - There were a number of suggestions; possibly not so much in Parks, I think we work reasonably flexibly within Parks.

Mr GADD - On the back of the mid‑year report in December last year, every department was given a budget management strategy and that was about 3.5 per cent going forward.  In DEPHA, we gave every division a 5 per cent target to aim for at that point, recognising it was highly likely there would be more to come, if not before the Budget process, certainly as part of the Budget process we were about to go into and that has been articulated since.  In a sense, every division was ready for what we had to achieve then and also had a bit of contingency for what we might be asked to achieve in the future.  That is why we are so well positioned at the moment. 

Having said that, as we go into the Budget round, we now have amalgamation efficiencies on top of what has already been articulated by going through the process.  It is not a case of us living beyond our means, it was more a case of us looking ahead and saying, 'We are going to have to cut; where are we going to cut?' 

It was only a couple of years ago that we argued, when the department was set up on a costs‑neutral basis, that we were underfunded, and we put an argument then that we needed additional resources in order to run the department properly.  That argument was $2.15 million in the first year, rising to $4.3 million in the out years ‑ the exact same figures that have now been identified as the amalgamation efficiency.  So what it cost to build it is what they will save as they unwind it.

CHAIR - So it was an expensive exercise then?

Mr GADD - When you set up a department you do have to have the office of secretary, IT and corporate, so, in a sense, you do get duplication.  It may have been expensive in terms of the total cost of $4.3 million.  In terms of return to the public, 10 times back, I would argue.

CHAIR - I would probably have to disagree in some of the park areas that have been managed.  But that is obviously an issue that will continue as elected members.

Mr WING - You are not able to identify the amount in total of the savings with the amalgamation?

Ms O'BYRNE - I can give you the broader figures across agencies.  I did not realise that is where you were heading, I apologise.

Mr WING - I want to ask also about extra costs associated with the amalgamation.

Ms O'BYRNE - Those are in the transition stage, the additional costs.  I assume you mean letterhead?

Mr WING - Well, whatever are the additional costs.

Ms O'BYRNE - We are not in a position to do that, I am sorry.  The letterhead is done electronically, so that is not a cost.  There may be costs in merging financial systems together and HR systems together.  We do not have a full analysis of that yet; we are still in the transition stage. 

What I can tell you, in terms of savings that are made, in 2009-10 we will have a decrease of just over $1.6 million.  $2.9 million is through budget management strategies and amalgamation efficiencies.  That can be broader than the saving we make, because we also have to coast.  We have had the public sector wage agreement and those sorts of projects, which mean we have had to find general savings in addition anyway, because in some areas we have had significant upgrades under the public sector wage management agreement.

The $1.6 million fluctuates because we have had an increase in funding in areas such as Macquarie Island pest eradication, we have another $3.6 million coming into that.  So there is a degree of offsetting happening there.

Mr WING - In terms of paying for redundancies, what will be the cost there?

Ms O'BYRNE - We do not know how many people will put up their hand.  The redundancy entitlement will vary around that.  Some people have expressed an interest.  We have allocated some money, but there is also some broader assistance from Treasury in managing redundancies.  We do not have the figure.

Mr WING - Do you have any idea of the range of the likely cost of paying for redundancies?

Ms O'BYRNE - We can tell you what we have had already, if that is any help.

Mr WING - That would be helpful.  But also, do you have any idea?

Ms O'BYRNE - We cannot, because if no one else puts their hand up, no one else puts their hand up.  That's a reality we have to deal with.

Mr DEAN ‑ If nobody puts their hand up, what happens?

Ms O'BYRNE - We will have to find savings somewhere else.  

Mr DEAN ‑ The Premier has said there will be 800 redundancies.

Ms O'BYRNE - That is across the entire public service.  Having spoken to the unions and staff, the unions are reasonably confident there will be enough people who are prepared to go.  But they might not all come out of my area.

Mr GADD - We started this process on the back of the mid‑year report in December.  We quarantined some funds then and we quarantined some funds going forward, out of central areas, mainly my office.  To date, we have either accepted or are in the process of processing 12 applications for voluntary redundancy.  Off the top of my head, the overall figure will be about $800 000.

Mr WING - Total cost?

[11.45 a.m.]
Mr GADD - The total cost.  There is an average of $60 000 to $70 000 per head.  Obviously it varies dramatically from individual to individual.

Ms O'BYRNE - For those that are approved.

Mr GADD - I am up to 14 so far and it is $670 000 total cost.

Ms O'BYRNE - It depends primarily on their length of service.