Health bureaucrats paid to do nothing

The SMH, as usual, seems to know stuff all. It published this story today about health bureaucrats being paid to do nothing, and it seems to have no idea at all about current government policy.

AT LEAST 17 health bureaucrats in western NSW are being paid up to $130,000 a year to do nothing because they were sidelined when the structure of the area health service changed four years ago.

The news of their annual wages bill, which could top $2 million, comes weeks after it was revealed the Greater Western Area Health Service was mired in debt, owing more than $60 million to creditors across the state.

The government has tried several times to have voluntary redundancy scrapped and to replace it with forced redundancy if it decides to abolish jobs in the state sector. The unions have generally blocked it at every turn.

So if your position gets abolished thanks to a restructure, as has happened in this case, you get put on the unattached list, and you sit around doing nothing and drawing a full pay cheque. It is not the fault of the bureaucracy - it is the fault of a gutless government drawing up rules that say you can't get rid of someone if you no longer need them.

Past redundancy packages have been pretty generous. They can include:

• 3 months pay if you go quietly, and go now
• 3-4 weeks pay for each year of service, with no limit on the size of the package
• Another month or two of pay, simply because you are being made redundant
• Don't forget your long service leave

I made a bloke redundant during my time. I had to - his whole area went. He was 62 at the time, and close to retirement. The sensible thing to do would have been to park him in a corner somewhere and let him count paperclips until retirement, but instead, here is what he got:

• 12 weeks for going quietly
• 40 years service x 4 weeks
• 12 weeks long service leave
• 8 weeks as the base redundancy package

In other words, we paid him 192 weeks salary - nearly 4 years worth - in one lump. I think there might have been another bonus in there because of his age. Since a redundancy payment is taxed at a concessional rate of something like 5% or 10%, it's actually like receiving 6 or 7 years of normal after-tax income in one hit.

He was so happy, he nearly kissed me. Him and his wife bought a caravan, and a 2nd hand 4WD and they took off on an extended around Australia holiday, which will probably last 5 years or so.

To cap it off, this bloke had undergone numerous heart surgeries, including a transplant, and he was not that healthy. If we'd kept him for another year, he probably would have dropped dead in the office. To cap it off, he was a member of the old State Superannuation scheme, which means he paid bugger all in, and will get paid a certain amount out, regardless of the state of the stock market etc.

I don't begrudge signing off on that redundancy at all - the government was silly enough to write the policy, and they were silly enough to push out very unhealthy old buggers who were about to retire. I guess you could call it a form of stimulus.

In my view, any public servant paid over $100,000 should be on a contract of some sort - the idea being that you can terminate the contract at will. I'm not saying that they shouldn't be given some sort of payout, but they shouldn't be allowed to just sit around as unsackable koalas (koala - protected species). Remember, even though these managers are paid up to $130,000 each, they will all be members of a union, and the union will fight tooth and nail to obstruct getting rid of them.

It's really quite perverse when unions start defending what used to be called "fat cat" managers, and doing their best to ensure that they get the largest possible payout from the taxpayer. Just for fun, let's do a calculation on a manager earning $130,000 with 15 years service:

• 12 weeks pay for going immediately
• 15 years x 4 weeks for redundancy
• 8 weeks redundancy base payment
• 14 weeks long service leave

That adds up to 94 weeks, or 94/52 x 130,000 = $235,000, with most of that taxed at 5% or 10% (the long service leave is taxed at normal rates).

If you are earning $130,000, you are in the top tax bracket, so you are probably losing 40% of your salary in tax, giving you an after tax income normally of $78,000.

Let's assume that after tax, the payout for this bloke is $190,000. That adds up to nearly 2.5 years of his usual after tax income.

Not bad, hey? And just remember, the unions will defend the idea of getting that sort of payout to the death. All paid for by your taxes.