Canberra’s public servants are understandably nervous in the lead up to the Budget. The “meat axe” promised in the election campaign was kept in the cupboard for last year’s budget. Has its time now come?

Last year, other than the increased 2% efficiency dividend, designed to achieve $1.8b savings over the forward estimates years, there were few cuts. Estimates of average staffing levels dropped by a mere 1,224 to an estimated total of 246,993.

Now with a looming recession, the talk is tougher, and the level of apprehension higher.

There should be opportunities for savings. Under the previous government departmental budgets rose to unprecedented levels. So did public service staffing. This graph from the Budget Statement 6 shows the trend:

Despite this, there are few easy options.

Looking at each portfolio in turn tells the story:

Agriculture, Fisheries and Forestry: some important policy changes still being implemented (eg wheat, quarantine); there may be scope to wind back spending on some rural programs as conditions improve.

Attorney-General’s: the department and its agencies such as the Australian Federal Police and ASIO was one of the main sources of growth in the public service over the past decade and saw massive staff increases. But hard to wind back unless the government has a change of heart and decides that national security fears have been over-exaggerated. No suggestion in the Prime Minister’s National Security Statement of any such U-turn in policy thinking.

Broadband, Communications and the Digital Economy: among other things, there’s the small matter of the National Broadband Network — and while the rollout itself is done by private firms, there’s a massive public service management load as well.

Defence: will need to shrink its civilian workforce if the government’s $20b savings are to be met, but new capability platforms will all need more uniformed personnel to run them.

Education, Employment and Workplace Relations: should see savings as a result of COAG’s streamlining of programs but offsetting this are new policy responsibilities in areas such as early childhood, and employment programs brought on by the recession such as the new training and employment guarantee. Probably little net change, but shifting of resources to new priorities.

Environment, Water, Heritage and Arts: cuts may be possible if the government restructures programs in the portfolio, but overall not many large targets in this portfolio.

Families, Housing, Community Services and Indigenous Affairs: hard to see a Labor government cutting back on social policy. Addressing indigenous disadvantage is a long term effort.

Finance and Deregulation: implementing a series of re-centralisation initiatives, especially in IT.

Foreign Affairs and Trade: fairly discretionary how much the government spends here, so it could be cut, but the Prime Minister’s international agenda suggests otherwise. The portfolio has powerful friends (such as the Lowy Institute) who argue we should be growing our numbers of diplomats.

Health and Aging: like DEEWR, has scope for savings with implementation of more streamlined Commonwealth-State programs; but recent swine flu panic will have come as a timely reminder to government that it needs in-house expert advice on health.

Human Services: biggest agency is Centrelink, which after facing up to some drastic staffing cuts when unemployment fell will now need to increase staff. A likely source of public service growth.

Immigration and Citizenship: going the other way — as immigration numbers fall, its staffing formula is likely to lead to cuts.

Infrastructure, Transport, Regional Development and Local Government: home to numerous handout programs. If the government plucks up the courage to wind these back, associated departmental resources could also contract. Offsetting this, faces a large infrastructure task.

Innovation, Industry, Science and Research: diverse set of responsibilities, many of which are close to Labor agendas; as with Infrastructure, cutting back spending programs might be in prospect, but the Minister has a number of alternative projects he’d like to fund.

Prime Minister and Cabinet: has grown progressively under every Prime Minister since Fraser as government authority gravitates to the centre; no signs of any reversal of that trend.

Resources, Energy and Tourism: a relatively small department, deals with influential industries, some of which (especially tourism) are arguing for more rather than less policy attention.

Treasury: central department is small, the Australian Tax Office and Bureau of Statistics workloads mainly externally driven. Biggest effect is efficiency dividend. There may be significant changes depending on how the government deals with the Henry review of taxation, but none of that is yet reflected in the forward estimates because it is not yet policy.

The upshot of this overview is that although there is scope in places for some reductions in departmental budgets, the economic downturn will lead to increases elsewhere. The net effect is still likely to be a reduction overall, but not as great as some public servants might fear.

Peter Fray

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