Australia Institute Centre for Future Work study shows health, education, public administration and safety, transport are big Hunter employment areas | UPDATED

Mr Shears said the report, titled Public Services in the Hunter: an engine of economic and social prosperity, contained a series of fact sheets that would be used to generate debate in the coming months.

"Not only do public services improve our living standards and attract investment into our communities, but they vitally bolster economic activity in our regional communities," Mr Shears said.

"Years of instability have proven how essential a strong public sector is and the value it generates for the entire community in times of both crisis and calm.

"When our state government sits back and watches the wages of nurses, paramedics, teachers, and more drop, the entire community suffers."

Launching the report, Mr Shears and various union delegates and officials said the typical state worker was losing $16,700 a year as a result of NSW government wage capping.

The report was written by the Australia Institute's Centre for Future Work.

Economist and centre director Dr Jim Stanford said, "There is an unfortunate tendency in politics to view public services as merely a cost item on a government budget. But in fact, they are a vital driver of economic growth and job-creation."

"State-funded public services also support tens of thousands of private sector jobs in the Hunter, both upstream in the supply chain and downstream through consumer goods and service sectors. It is vital to the prosperity of the whole region that these services are supported and well-funded by the next state government."

Fire Brigade Employees Union state secretary Leighton Drury criticised the wages cap, saying public servants were not keeping pace with the rising cost of living.

"Fire Stations are being shut down due to lack of staff all across the Hunter region because this government wants to save a dollar," MR Drury said.

NSW Teachers Federation organiser and Hunter Workers vice-president Jack Galvin Waight said the Coalition government's policies were hurting the Hunter.

"This research (report) shows that needless austerity and pay caps threaten public services and the Hunter economy," Mr Waight said.

"The teacher shortages in the Hunter and the cuts to TAFE are crippling our students learning and have lead to a profession in crisis.

"The government's own documents show that the only way to fix the teacher shortages is by addressing unsustainable workloads and uncompetitive pay."

UNION peak body Hunter Workers is launching a new report commissioned from the Australia Institute that makes the case for the public sector as an engine of growth in the service economy.

The report was scheduled to be launched at Hunter Workers at 11am on Tuesday.

The report says public sector jobs account for 35 per cent of total Hunter employment, with work clustered in four key sectors - health care, education, public administration and safety, and transportation.

It says 85% of the net job growth in those sectors in the past five years was in the public sector.

"State-funded services account for the lion's share of all public sector work," the report Public Services in the Hunter: an engine of economic and social prosperity says.

It says more than 80 per cent of the Hunter's public sector jobs are attributable to state services (including health care, education, state government, and transport), with the remainder being council and federal jobs.

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It says state-funded services account for almost 30,000 direct full-time equivalent (FTE) positions in the Hunter region - which make the state the largest single employer in our region, with these services adding a claimed $3 billion a year to regional gross domestic product (GDP).

It puts the combined wages and salaries for state public sector workers at $2.65 billion per year, describing this as "an enormous injection of household income and spending power into the regional economy".

"State-funded service agencies in the Hunter (including hospitals and schools) purchase some $1.3 billion worth of "upstream" inputs, materials, supplies, and services from private businesses in the public sector supply chain," the report says.

"Consumer spending by state public service workers in the Hunter (and those in the supply chain) adds $1.75 billion to the sales of consumer goods and services businesses, most of them located right in this region."

The report indicates a job multiplier effect of 0.5: for 10 direct jobs in state-funded public services, another five indirect jobs exist in upstream supply chain and downstream consumer industries.

"45,000 regional jobs depend on continued provision of high-quality state public services," the report says.

The report highlights the importance of public sector jobs for women, who account for 64 per cent of employees in major Hunter public sector industries.

It says the gender wage gap of 12 per cent for ordinary full-time earnings is much smaller than in the private sector.

The report finds the Hunter has a higher level of public sector employment than Sydney - a statistic that can also be read to say it has a lower level of private sector employment.

The report says the full-time equivalent numbers of state service jobs in the Hunter account for 11.4 per cent of all Hunter employment, which is two percentage points higher than in Sydney.

The report cites international evidence to say that quality of life considerations (including community safety, housing, transportation, and culture and recreation) are increasingly vital in attracting new business investment to a region, and uses this to argue for "continued public fiscal support for top-quality public services".

The report says that when the private sector expands, "business headlines pay tribute to the new opportunity and prosperity that result".

"The same is true of the expansion over time of essential public service industries like health care, education, public transportation, community services, and more," the report said.

"These services are not just a 'cost item' on a government budget.

"They are sources of work, value-added, income, and tax revenue as important and valid as any private sector undertaking. Even more, since these sectors are premised on directly serving the public interest, the economic and social benefits are all the more apparent."

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