Finance Minister Paula Cox this week defended Government against concerns that costs are not being kept in check ? especially on the personnel side.

Ms Cox told an audience of business representatives that Government carefully considers the necessity of every cost and hire, despite the cost of employing civil servants eating up half the country?s operating budget.

Figures in the 2005/2006 Budget released last Friday show that $376.5 million has been budgeted for employee costs. Broken down, the figure works out as 53 percent of the total $711 million budgeted for Government this year. Funding for capital projects fall outside that planned $711 million spend.

Although Government ? the Island?s largest employer ? said it only plans to add a net total of 30 positions in the coming year, with employee numbers set to rise to 5,188 from 5,158 last year, it has budgeted for $12.7 million more in employee costs.

Government?s $376.5 million employee cost budget calculates out as $72,500 per person. The total represents an increase of about $12,500 per Government employee since 2001, for an average increase of four percent per year. The rate of growth in employee costs is causing some concern as it outstrips the Island?s average inflation rate over that period.

Some of the concern has come from the Island?s international business community, a sector that pays a significant portion of the fees and taxes that go into Government coffers.

In delivering the Budget last Friday, Ms Cox revealed that Government was estimated to take in $44 million more in revenue than expected for a grand total of $738 million for the last fiscal year. A large percentage of that came from payroll tax receipts which were said to have brought in $28 million more than the expected $220 million. Much of the additional revenue last year and this year on the payroll tax side is likely to have come from international business which was said in the Budget to have seen strong growth in jobs, making it the largest local employer after Government. In total, employment in this sector reportedly increased 8.3 percent to 4,096 jobs.

One businessman at the Budget breakfast said: ?Is the cost of Government being kept under control? I?m mindful that your tax base looks to international business as a major source and we?re grateful there was no increase this year, but times are not always rosy.?

Ms Cox said a tight rein is kept on spending: ?Ministers, when they sit around the Cabinet table and when they sit with the Ministry of Finance, have to defend every item. We are often considered very ruthless because a number of programmes may get scrapped because it is not thought that they are value for money.?

As for Government?s increasing employee count, with nearly 300 positions being added since 2003, Ms Cox said: ?You?ll find it is, on occasion, driven by the need of the community. You?ll see [in the Budget there is the growth from 11 Police officers to 22 for the PSU. Clearly there are certain areas where you have to make sure you are delivering the services. We are not just adding on, but adding when there is a justifiable need.?

Ms Cox said the issue of Government costs has periodically caused concern, and not only from the general public but also within Government itself. She added that this was the very reason a zero-based budgeting approach was introduced several years ago by her late father, former Finance Minister Eugene Cox. Under zero-based budgeting, Government moved to a process where the operating budget each year starts from zero, or without any pre-authorisation of funding. In a zero-based budget, each activity to be funded must be justified every time a new Budget is prepared.

Ms Cox said that Ministry by Ministry, each area must each year justify the funds it requires. ?It is not just automatic that whatever your [Ministerial budget was the previous year, that you are just going to take and add an amount on to that.?

She said the Education Ministry?s budget was a prime example of that, with it previously being given $1 million to go towards the National Training Board but now that amount had been ?scaled back?.

But Ms Cox said she was troubled that employment costs were increasing at a rate faster than inflation.

She shared that Government was currently facing wage negotiations, but would not give in to demands unless there was a proven value for money proposition. In this case, she said the matter was likely to go to arbitration.

?When people come and say they want a particular package, if it doesn?t make sense from a financial point of view and we don?t see that there is the value for money, you cannot just acquiesce. Then you put it to the Minister of Labour who puts it to a reasonable arbitration panel to come up with a decision.?

She declined to give name the party being negotiated with, saying Government was at a ?sensitive? stage.

Ms Cox continued: ?You will recall when I was Minister of Education, what we may have thought was reasonable was not what the arbitrator thought was reasonable, so you saw a significant boost.

?There has also been a decision taken that for every position you create, you should ? where there are circumstances warranting it ? you should be getting rid of two positions.

With something like the Police Service, you cannot necessarily adopt slavish adherence to that rule but certainly Ministers know they cannot come to Cabinet asking for increases in staffing without a very defensible reason.

?We are conscious that much of the Budget is based on staffing and personnel costs. And Government, just like everywhere else, has to look at how it can deliver services in a more effective and efficient and cost-effective manner.?

Another audience member said: ?The cost of Government is obviously one factor but also the process of Government.

?We all have to deal with different Government departments and the efficiency and speed of those dealings are obviously of some concern.?

Ms Cox agreed that the ?the issue of efficiency makes sound business sense?, adding that ?all up and down Government there were attempts to make Government more efficient.?

She said e-Government ? with more and more departments putting in systems enabling applications and remittances to be made online ? was one way Government was trying to streamline processes.

She added that while everyone in the audience had been ?too gracious? to ask about the salary levels of MPs and Ministers, wage increases for Government leaders might soon be made, but an increase could result in fewer Ministerial positions.

?While there may be many who support that, and advocate that, there is to be an independent salary review panel who decide what should be paid to Government MPs and Ministers. As part of that, and as an outflow of the civil service review, normally you might see a diminution or reduction in the number of ministers, with a commensurate increase in their salaries.?

Ms Cox concluded: ?The issue of being more efficient is certainly one that bedevils us and one that we seek to improve.

?If you went up and down the various ministries, you would see there have been a number of initiatives that have streamlined.

?There is certainly an attempt to improve things but one cannot afford to be complacent. We will continue to put regard on your [the public?s input.?