#publicservice

Why are there so many chiefs but so few Indians in the APS?

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Did you know that your Australia Public Service (APS) at a federal level is becoming more bloated among executive management ranks?  According to the APS website, “An APS Level 6 employee would generally be required to undertake work that is complex in nature, work under limited direction with the opportunity for reasonable autonomy and accountability. Employees at this level exercise both initiative and judgment in the interpretation of policy and in the application of practices and procedures.

This first chart highlights the level of APS Level 6 (and above) positions as a percentage of total staff. It is not an exhaustive list of every single department or agency but a large cut of the main ones. CM left out the Australian Tax Office (ATO) for obvious reasons. Although a post-divorce audit wouldn’t reveal very much…we also left out the Department of Defence due to the inconsistency in the annual report data.

The Bureau of Meteorology (BoM) is the worst offender, with over 85% of the staff classified as APS level 6 or higher. A marginal lift on a decade ago. CM already reported on the poor performance of the BoM earlier in the week.

Dept of Treasury (DoT) and the Dept of Industry, Innovation & Science (DIIS) also have three-quarters of staff in senior positions. DoT is almost 10% higher and DIIS c.5% more vs 2008-2009. We literally have to get down to the Australian Bureau of Statistics (ABS) to break the 50% threshold between management and non-execs.

While there is a point to be made that some career public servants deserve to be promoted,  surely it is a fair question to ask why there are so many more chiefs than Indians in most of the departments?

Salary APS

Headcount in some departments has fallen but on the whole, the total employee cost has risen. You can see this below.

Cost Employee

Mathematically, the more junior levels would seem to be leaving these government departments as opposed to the old guard stepping down in order for APS Level 6+ percentages to keep rising.

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A point worth mentioning within these figures has been the amalgamation of certain departments such as the Dept of Human Services (DHS),  which includes the merger of Centrelink & Medicare (in 2009). This explains the large jump in staff numbers thereafter. Although the Department of Prime Minister & Cabinet trebling over the last decade seems somewhat excessive.

The Dept of Home Affairs (DHA) now includes the Department of Immigration and Border Protection, Multicultural affairs, ASIO, the Australian Federal Police, Australian Border Force, the Australian Criminal Intelligence Commission and AUSTRAC so the more than doubling in size does not appear inconsistent.

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When analysing average salaries in these departments it is clear that the Dept of Foreign Affairs is the place to get paid. Average salaries are around $210,000, up from $170,000 a decade ago. Although given the low base, the Dept of Human Services has risen the most. Do note DHS has the best ratio of 25% chiefs to 75% Indians.

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Of course, inflation would explain away some of the salary increases over the last decade but it still stands to reason that the growing percentages of senior staff within the public service are continuing to put upward pressure on budgets.

In private enterprise, it would be unheard of to have these types of management to employee ratios. While some may argue that certain departments fulfil roles the private sector might struggle to do as efficiently, given the bulk of these public services have 50%+ management structures suggests there is plenty of streamlining that could be achieved. How is that the BoM has 85% of staff in management yet less than 3% performing the role of research scientists? Despite all that management experience at BoM how is it so many errors and mistakes are made? It literally doesn’t add up.

Too many chiefs, not enough indians

Minimum temperature outlook map

Did you know that 85.1% of the Bureau of Meteorology (BoM) staff are classified as APS6 or higher? That means the overwhelming majority of people in BoM are classified as senior management with executive responsibilities within the public service. The APS website notes the following:

An APS Level 6 employee would generally be required to undertake work that is complex in nature, work under limited direction with the opportunity for reasonable autonomy and accountability. Employees at this level exercise both initiative and judgment in the interpretation of policy and in the application of practices and procedures.

Of the 1,671 staff, the BoM has 3 apprentices, 5 graduates, 1 APS level 1, 3 APS level 2, 61 APS level 3, 29 APS level 4 and 115 APS level 5. All data gleaned from the Annual Report 2017-18. Almost $180m in salaries are spent on them.

Is there a real need to have so much senior management, especially as the outputs have come under much scrutiny in recent years? The Australian Bureau of Statistics (ABS) has 50.8% of its staff in APS6 positions or above. It too is a data collector. Shouldn’t seniority numbers more closely align with the ABS at the BoM?

The Deptartment of Environment & Energy has 51% of its staff at APS level 6 and above. The Department of Finance 57.2%. DFAT 67%. The Department of Health 71%. Alarming that half of staff are in senior positions in many government agencies, but 85% for BoM?

Should we be surprised at the number of hiccups with measuring equipment when the BoM’s field offices have consolidated from 55 to 36 in the last 5 years? Should we applaud the consolidation as decisive leadership on cost containment or question larger sized field offices leading to suboptimal reporting outcomes and the propensity for making mistakes from remote stations?

JoNova notes a whole raft of incidents at the BoM. From using temperatures in Victoria to help adjust temps in Tasmania to installing thermometers atop hot tin roofing and bitumen. Homogenized data. The lot. It is frankly disgraceful.

Several highly dedicated amateur meteorologists are methodically going through the BOM’s weather stations. Approximately 18% of them do not meet the BOM’s own criteria for “best practice”. Not only that but the BOM’s electronic thermometers record the temperature every second. The World Meteorological Organisation (WMO) states that records must be continuously averaged over each running two minutes to cut out the risk of temperature “spikes”. However the BOM refuses to do this meaning that a thermometer at the edge of an airport, for example,  receives a three second spike from a taxiing aircraft, that becomes set as the maximum temperature for the day.

Remember the BoM went on the offensive claiming the hottest day ever until having to retreat with a tweet,

#SydneyHeat: Sorry, in our earlier checks we missed a 47.8 degrees C temperature recorded at an old #Richmond station (now closed) in 1939. 47.3 today still beats the previous #Penrith record.

Yes it was hot, but so eager to push their warming bias, that they fell foul to poor governance controls.

Of the 1,671 staff, only 55 are recorded as ‘research scientists.‘ While this number has grown in recent years, shouldn’t the BoM be investing in more people to ensure the data isn’t prone to so many errors?

For an organization that spends nearly $400m pa, shouldn’t things be reassessed? Shouldn’t the government look at how much bloat is in the BoM ranks? Don’t hold your breath at the new blood entering BoM. Trainees undertaking the Grad Dip in Meteorology is at a 10 year low.

Is a Royal Commission into our BoM not being conducted for fear of discrediting the practices of an organisation that must be revered by we mere peons for our temperature data?

With so many chiefs and not enough indians, is it any wonder that the BoM seems more about the politics of weather than the actual science?

CalPERS unfunded pension deficit approaches $1 trillion. Who is counting?

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California Public Employee Retirement System (CalPERS) lost around 2% of its funds in 2015/16. The fund assumed an aggressive 7.5% return. Dr. Joe Nation of Stanford Institute for Economic Policy Research thinks unfunded liabilities have surged to $150bn from $93bn in the last two years. He suggested the use of a more realistic 4% rate of return last year. At that rate, CalPERS had a market based unfunded liability of $412bn (or the equivalent of 2 years’ worth of California state revenue). At present Nation now thinks the number is just shy of $1 trillion using a 3.25% discount rate. He expects that the 2017 data for CalPERS will be out in a week or so which should give some interesting perspective as to how much deeper the pension hole is for Californian public servants.

N.B. California collects $232bn in state taxes annually in a $2.3 trillion economy (around the size of Italy).

 

Trudeau pushes for more compelled speech

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You can’t make this stuff up. The Trudeau government plans to ban front-line public service workers from saying Mr., Mrs., Mother, and Father. In what can only be seen as another push toward more compelled speech legislation,  the majority have to put up with more political correct nonsense for the benefit of peoplekind.

Seriously though, if someone is going to be so irreparably mentally damaged by the misuse of a pronoun that it requires legislation to protect he/she/xie, the victim has far bigger issues that require immediate help. How fragile can one be?

The beauty is that for the 99% of us that identity with our biological make-up must make way for the 1% of which it’s actually only 1% of that who would benefit from this legislation. Take the same sex marriage debate in Australia. The 2015 Census showed that only 0.03% of all couples identified as a traditional marriage and same sex. It isn’t questioning equal rights but most campaigners had next to no idea how many it truly impacted. Yet don’t step in the way, else be shot down as a bigot or homophobe.

To put the shoe on the other foot, shouldn’t our rights to be addressed Mr. or Mrs. be equal to that of those who don’t?  Like Bill C-16 the apparatchiks in charge of introducing these laws are by far and away the least appropriate people to enforce it. What are civil rights if legislation only applies in favour of certain groups? Surely Canada’s social service systems can field and burn in requests on which people wish to be called what without having to blanket ban language.

The laughable fact with respect to Bill-16 (which is designed to protect gender identity and expression), is that the Trudeau government did not consult transgender people widely. The sheer fact that they clump all transgender people as “one” distinct group just shows how ignorant Trudeau’s cabinet is. There aren’t individuals within the trans community who think differently from other trans? Who’d had thought?

Yet the left see that such legislation is all about positive outcomes which judged by the complaints by the transgender community show the opposite. Many transgender people do not want to have their identity widely advertised. Yet this legislation seeks to disrupt others into compelled speech many trans people aren’t calling for.

Welcome to the slippery slope. At least one thing is for sure, if the polls are right and  Trudeau gets booted in the 2019 election, Qantas will happily put him in charge of the political correctness department so as to make sure all of the aircraft safety videos address gender equality over the more important safety aspects.

The $6.7 trillion US public pension black hole

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Zerohedge published this report today on the $1.2 trillion public pension black hole in America. Time to update the latest stats of a report CM wrote in August 2016 on the very same topic. Here is betting things have only got worse.  Taking California Public Employees Retirement Scheme (CalPERS). In 2014 market pension debt per household was $77,000. In 2016 it hit $122,000. In 2008 it was only $36,000. US Pension Tracker reports that the 2016 marked-to-market figure of the total US public pension deficit is $6.734 trillion vs actuarial basis of $1.467 trillion.

Australian Constitutional scalps?

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Most Australians have no idea of the contents of our constitution. Dennis Denuto is probably one of the more versed. In America we know the 1st Ammendment is all about freedom of speech, the 2nd about the right to bear arms and we know what pleading the 5th is about. This is a list of Australian politicians who were born in countries other than Australia. Section 44 (i) of the Australian Constitution states, “Any person who is under any acknowledgement of allegiance, obedience, or adherence to a foreign power, or is a subject or a citizen or entitled to the rights or privileges of a subject or citizen of a foreign power…shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.”

Two Greens senators (Scott Ludlum & Larissa Waters) have recently resigned after being in breach of this. One has to question how anyone (much less politicians) are unaware that they are dual citizens. My kids are well aware of their dual nationality. Now we will see many of the above confirm their Australian citizenship.

Rules are rules. Regardless of whether these people have served their constituents in good faith, there is a requirement to change the constitution.

When one thought Australia had maxed out its ability to display a fractured political system, the constitution may well clean house.

Is it any wonder the natives are restless? Part time employment is growing too fast

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The alarm bells keep jangling. I remember reporting on why I thought Trump would win the presidency more than12 months before the fact. The employment situation defied the stats which the Democrats continually congratulated themselves over. Yet beneath that poverty was at all time highs, people on food stamps had grown 12mn since 2008 (to 46mn) and the number of people working more than one job was a record 8mn. The gap between the haves and have nots just kept getting bigger.

Stratfor wrote in the similar outcome in Europe today,

About six in ten jobs in the European Union today are full-time permanent positions. But jobs offered under part-time and temporary contracts account for an increasing share of total employment. In 2003, well before Europe’s economic crisis, 15 percent of workers in the European Union were employed under part-time contracts. By 2015, that had risen to 19 percent. During the same period, temporary contracts rose from 9 percent of total employment to 11 percent. Temporary jobs offer less security than even part-time permanent ones. They often come with lower salaries and fewer training and career advancement opportunities, making it harder for workers to access credit, plan their consumption decisions or qualify for unemployment benefits.”

One other glaring stat that sent shockwaves was the sharp increase in public sector employment. Even Germany saw public service jobs expand from 9% in 2001 to over 16% in 2013. Every EU country with the exception of France (ironically) exhibits the same state built employment market which masks the disastrous economic stewardship since GFC. Please refer to page 13 of this report for graphic.

Stratfor goes on to say,

“Job security is also tied to workers’ overall satisfaction. Since the start of the 2008 crisis, many Europeans have been forced to accept temporary contracts or permanent part-time jobs when they would rather work on a full-time, permanent basis. In many cases, the part-time or temporary contracts do not offer a path to full-time work. In some countries, low salaries also put the working poor at risk of falling into poverty. Jobs that do not offer much security can be found almost everywhere in the European Union, but they are particularly prevalent in the south, such as Greece, Spain and Portugal, where the unemployment crisis was more severe and the economic recovery more fragile. In addition, the structure of the economy in Southern Europe is more conducive to the creation of such precarious jobs.”

Whether one likes it or not the appeal of Le Pen in France is not a mere lurch to xenophobia. If you rationally listen to her platform outside her stance against Islam she makes salient points on policy that will make citizens feel safer about their economic future. The UK Labour Party totally misread Brexit and now face total wipeout on June 8. Like we know from many recent polls they are prone to enormous swings. The Twitter correlations of Trump, Brexit, Trudeau picked the winner. Le Pen is way in front although growth in followers since yesterday puts Melenchon top with Fillon second. Le Pen’s growth came in 3rd. However Facebook following puts Le Pen over 400,000 clear of her nearest rival, Melenchon.

The weird trend in global politics is that traditional party lines are fraying. The Aussie Liberal Party which I’ve supported religiously since I could vote no longer represents me. People are growing tired of empty promises or politicians that swing toward a stance to capture a wave when it contradicts previous policy. Le Pen, like Pauline Hanson speaks a consistent language. Whether one thinks certain policies are bigoted, racist or un-PC is irrelevant to a growing number. They want results not platitudes. These voters are prepared to sacrifice some unpalatable views in return for someone they feel they can trust in matters most important to them – put simply financial security.

If the world economy was ticking along so nicely we wouldn’t see the likes of Le Pen, Hanson or Trump. The reality is simple, when they draw the curtains each morning they see approaching storm clouds get closer and closer not the blue sky they crave.

A record to be proud of?

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A lot of people may look at the unemployment statistics and marvel at the seemingly low rates. I noted Queensland’s Palaszczuk government now employs more than 250,000 staff with the bureaucracy ballooning by more than 2500 full-time-equivalent workers in three months supposedly in health and education. Don’t get me wrong – the public sector provides vital services – fire, police and ambulance, to name just three-which are served by top drawer people. However looking across the globe, we see since the turn of the decade the OECD reports that pretty much every country has grown its public sector payroll at the same time government debt climbs and the economy slows.

Forbes wrote an interesting article pointing out an obvious longer term issue as follows:

“In many states, public service has little to do with serving the public and everything to do with using the public’s money to serve politicians. Whenever we open the books, California is consistently among the worst offenders. Recently, we found ‘animal collection curators’ making $110,290; city librarians earning $222,320; public utility commission bosses at $550,028; and county hospital doctors making $1.274 million.

This spring, at Forbes, we exposed 50,000 Illinois public employees earning six-figure salaries who cost taxpayers $8 billion. In California the numbers are exponentially larger: 218,667 employees making six-figures who cost $35 billion. For example, Illinois has 72 ‘city managers’ out-earning every governor of the 50 states. But, in California, the salaries of 171 assistant city managers average $201,550!

Using our interactive mapping tool, quickly review (by ZIP code) the 220,000 California public employees who earn more than $100,000. Just click on a pin and scroll down to search the results rendered in the chart beneath the map.”(You can see that via the previous link)…

In total, there’s roughly $35 billion in total benefit flowing to highly-compensated government workers when counting the 21,332 federal employees based in California with six figure salaries.”

A while back I wrote on the awful state of government pension funds in the US and the risk of insolvency given the unfunded portions were multiples of the state tax collections (for California it was 3x annual tax intake). I wrote:

“To put this in perspective the California Public Employee Retirement System (CalPERS) lost around 2% of its funds in 2015/16. The fund assumes an aggressive 7.5% return. Dr. Joe Nation of Stanford Institute for Economic Policy Research thinks unfunded liabilities have surged to $150bn from $93bn in the last two years. Furthermore suggesting the use of a more realistic 4% rate of return. CalPERS has an unfunded liability of $412bn (or the equivalent of 3 years’ worth of state revenue). California collects $138bn in taxes annually in a $2.3 trillion economy (around the size of Italy). With over-inflated asset markets and increasingly negative returns on highly rated paper, the growth in unfunded liabilities is even more concerning as any market correction (likely to be severe given such blatant manipulation to date). If the correction is huge it will push the unfunded portion to even more dizzying levels.”

Since the Global Financial Crisis (GFC) we’ve been living on borrowed time. It doesn’t take a genius to work out that this endless printing and hoovering up of toxic waste on the public purse then hiding it to mask reality can’t go on forever. It is a legalized Ponzi scheme at best. Even the legality can be questioned. Manipulation of financial markets is taking away the one way to reset and create price discovery.  Talking to some of my old pension fund manager clients, many lament that they are being buried by regulation on one side and government participation which is destroying fundamental performance based on individual company merits. Sure robotic (algorithmic trading) makes sense for a lot of capital allocation but not all.

I still hold that we are on the precipice of the largest economic shock since 1929. The worst part about it is that central banks have no ammunition left. Negative rates worked in Norway for a period but they aren’t working in Japan. Why? Well confidence remains the biggest neck. If you give money away and people stuff it between the mattresses then you aren’t instilling them with hope. Most Japanese know that the “national insurance” they put away is nothing but a massive black hole which will likely never return to them after retirement. So at negative rates, their investment opportunities are made riskier to get less return.

December 4th is a big day. Italian referendum which is likely to fail, throwing Italian politics back into its normal rhythm (volatility) and an Austrian presidential rerun which should favour the right wing FPO after the voter fraud discovered at the previous one held in May.

Throw on top of that Schulz taking an escape pod from the EU, Marine Le Pen edging closer to a presidency next year and we have the settings for overpriced asset markets, stretched government budgets, record levels of debt accumulation, insolvent pension funds, bloated public sectors and impotent central banks out of bullets to resurrect us. With thermonuclear fuel failing to reset us, the only way out of this is to massively cut taxes, deregulate and let the people’s confidence lead us out. In case you hadn’t noticed, more government doesn’t work.

Perhaps Reagan put it best about government – “if it moves tax it. If it keeps moving, regulate it. If it stops moving, subsidize it!”

Trump is actually just the type of politician to shake us from this drug induced slumber over the last few decades. Be thankful we didn’t get Clinton – it would have been more of the failed policies under Obama that crushed the middle class and small business, the incubator of innovation and jobs creation.