If this was a tough budget, from the perspective of the federal public service, then you have to wonder what a soft budget would look like. The last tough budget the public service experienced was from Peter Costello in 1996. Since then, it has been pretty much continuous growth. This budget was the same.
Employment in the general government sector grew by more than 1,000 (average staff levels), and taking out uniformed defence people, by more than 500.
It was a watermelon of a budget; glossy on the outside, good in parts, but a touch squishy in others.
The revenue side was well handled, and at last the government has gotten around to tackling some of what are known as tax expenditures, the many concessions and allowances that help individuals and companies reduce the amount of tax they pay.
On the spending side, there were some real savings in relation to indexation of family payments and a multitude of smaller savings spread across portfolios, but there were also some that were simply deferrals of spending to later years.
Not many revenue or spending decisions affected public service staffing, except for a temporary increase in the efficiency dividend — an across the board cut to all departments budgets raised to 1.5% for this and next year — and a requirement for some agencies to find extra savings elsewhere.
Finance Minister Penny Wong said in an interview published in the Fairfax press yesterday that this would be a Labor budget. Insofar as the labour movement wants to protect jobs in the public sector, it clearly is. There will be protestations about the inequity of the efficiency dividend — and indeed it is a blunt instrument of a saving — but these will be more for forms sake than a real complaint.
There are not even cuts in net terms in Defence, despite foreshadowed savings in the civilian side of that portfolio. There are savings in terms of pocketing some predicted underspends and rescheduling of some capital works, but in total the Defence portfolio gains in terms of both staff numbers and total dollars.
The Defence reform program, which is meant to deliver $20 billion in savings, is not in practice able to be independently verified, That’s because at the same time it is underway, additional budget dollars are being provided for other purposes. In the absence of the reform program, would Defence have reallocated its funding to those purposes anyway? We cannot tell.
As economists say, dollars are fungible: once they go into the one pot, they can be used for whatever purposes you like. So even if you label some of them as “saving” and some of them as “spending”, it makes no difference. What counts is the net impact on the budget bottom line.
The Australian Public Service Commission produces annual summaries of numbers of public servants, adjusted for the movement out of the public service of the old Postmaster General’s department (now Telstra and Australia Post), that prove the trend of annual growth over the past decade. We now, on this and other published measures, have the largest Commonwealth public service ever in Australia’s history.
There are good reasons for the public service to grow: to keep up with the growth of the Australian population and economy, to meet new demands for services. Even so, recent growth in public service numbers has been well in excess of population growth rates
Are we getting a better level of service in return? Arguably yes: the public service is very good at things like disaster response, social welfare payments, tax collection, and many other areas of service delivery.
Even the home insulation program was a success — you read that right, the external and independent Hawke review found that the program had succeeded. Similarly, the Building the Education Revolution program of schools capital works was highly successful, with relatively low overspending despite being rolled out in super-quick time as a stimulus measure.
The meme of public service ineptness is hard to eradicate, despite whatever evidence to the contrary is gathered. That is one of the reasons why the public service, if opinion polling is anything to go on, is not meeting the expectations of the Australian people.
The other reason is that it faces little budgetary pressure. It was not subject to the demands of the reform programs under the last Labor government that insisted on a public service delivering more services with fewer resources.
This is not the late 1980s. There is no particular reason today why the budget ought to place such demands on the public service. It already has a huge level of expectations on it and for the most part manages them well. Cutting public servants for the sake of it may gladden the hearts of shock jock commentators, but achieves little for the country.
However, if some of the risks identified in the front section of Budget Paper One (the one that almost nobody reads) do come about, times will get tougher. That will be the real test of the public service — we will be back to the crisis mode of the genuinely tough Hawke/Keating budgets.
We should also not make light of the areas where there will be considerable effort required to meet savings targets. There were several agencies that experienced staff cuts in this budget. An irony in a budget that had a centrepiece of training and participation is that some of those who were cut like Centrelink and DEEWR have the best records in terms of employing indigenous Australians and people with disabilities.
The net effect in the budget overall may be pretty much business as usual for the public service, but there will be pockets of real pain that public service mangers will need to deal with.
Stephen Bartos is a director of Sapere Research Group and a former Deputy Secretary of the Commonwealth Finance department