Nurses pay offer sparks pay explosion fears

The Government is about to come under pressure from some of its most loyal supporters as nurses head towards settlement of a big wage claim.

To head that off it is trying to keep exactly how much the DHBs are offering the nurses out of the headlines so it doesn’t provoke a public-sector wage explosion.

Now teachers and possibly police will be seeking relativity with the nurses who have a headline rise of nine per cent over the next two years.

The potential impact of that on the Government’s fiscal balance is unclear but coming on top of the extra expenditure announced this week on Mycoplasma Bovis it will not be welcome news in the Beehive.

But it is the potential of the wage offer to spread through the public sector which really worries the Beehive.

As a consequence, there is clearly a move to try and obscure the real value of the nurses’ offer.

POLITIK understands that once penal rates and other allowances are applied, the average increase for nurses will work out at 16% but the official line is that it is a nine per cent increase.

Sources have told POLITIK that Government Ministers are not talking about the nurses’ offer in public so that it stays low key. Finance Minister Grant Robertson had nothing to say about it to POLITIK last night.

Even at nine percent, the offer is far more than DHBs were initially budgeting for. The Health Select Committee earlier this year was told that they were expecting annual wage increases of two per cent.

But the other problem will be that the offer will encourage other state employees like teachers to hold out for similar sized increases. 

Which is why the DHBs are apparently being encouraged to headline their offer to the nurses as a nine per cent offer, applicable over the next two years.

All up the wage offer will cost $520 million extra with two-thirds of that having to be paid this financial year.

Half of that — $260 million is said to be already accounted for while the other $260 million is new funding.

The situation surrounding the fiscal impact of the settlements is unclear.

Finance Minister Grant Robertson told the Budget media briefing that the estimates provided for wage settlements, but he wasn’t going to say how much.

It is not clear whether that means that it will be supplementary to the Budget allocation for health or whether it will come out of the extra funding allocated to DHBs in the Budget.

If that is the case, it will take a fair bite out of the $550 million allocated each year for the next four years to DHBs.

Ironically the latest figures available from the Ministry of Health show that the DHBs in the year up to the end of February were staying within their personnel budgets.

But, because of staff shortages, probably due to pay issues, the DHBs were having to pay for contract staff and those costs were over budget.

The bigger problem may be that are still other big wage claims in the health sector to come.

Both the primary and secondary teachers have a round of stop work meetings scheduled over the next month to consider progress on their pay claim.

The secondary teachers’ union, the PPTA, have said they believe they need a 14.5% increase to maintain their relativity with overall wage earners.

All up there are 47,000 teachers compared with 31,000 nurses, so any teachers deal is likely to add at least $100 million to Government spending, probably more.

It is little wonder then that the PPTA is calling on the Government to relax its fiscal responsibility rules.

Writing in this month’s PPTA news, the PPTA President, Jack Boyle, says “We want this government to take the once-in-a-generation opportunity they have and invest in what matters most – people – and pie.

“Shrinking our already very low public debt and limiting spending to around 30 per cent of Gross Domestic Product will mean this government will not be able to address well-being and the social deficit – including fixing teacher supply.

“ We want them to put aside pointless self-imposed “rules” and do the work they were put into government to do.”

In a way these wage claims are a big test of just how “Labour” the Government is; of how much it is willing to move beyond the tight fiscal restraints of its predecessor.