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May 15, 2013

Public service: $600m in savings, but they won't feel the pinch

The public service has been asked to find $600 million in their budgets over the next four years. But job losses have been kept at a minimum, governance expert Stephen Bartos reports.


Does the budget change things for the nation’s public servants? Not so much.

Finance Minister Penny Wong announced public service efficiency savings of around $600 million over four years. It is a tiny number compared with total operating expenses.

Among these is $73 million from introduction of paid parking on national land in suburbs near Parliament House in the heart of Canberra. It is sure to be a talking point among Canberra mandarins. The saving has been suggested for at least a decade but not implemented until now. Most of the rest of the Commonwealth public service, the bulk of which is located outside Canberra, will be quietly amused. The patch of real estate in question includes the central agencies of Treasury, Finance and Prime Minister and Cabinet, ever the target of resentment from others.

Other savings include reducing executive and senior executive staff. It amounts $148 million over four years: on average only $37 million per year spread over all agencies. It responds to the disproportionate growth in these levels, as previously reviewed in Crikey. Instead of relying on an arbitrary cut it will be planned and implemented over time — a welcome move.

The public service union is predictably disappointed about staff cuts of 1262 but warns that the Coalition would cut harder. Opposition Leader Tony Abbott has promised the Coalition will cut at least 12,000 Commonwealth public service staff through natural attrition.

There is no additional efficiency dividend in this budget, itself a reversal of form from the recent past. Indeed, the government has kept its promise that the efficiency dividend will fall back to its regular level 1.25% from 2013-14.

The staff cut of 1262 is not a new measure, but the result of past efficiency dividends flowing through. The official term for this in the budget papers “alignment of staffing to operate within the allocated budget”.

Some agencies have significant staff increases, including a net 508 additional average staff level for the Australian Taxation Office to implement new tax compliance measures.

The net reduction in staff overall shows that for once public sector bodies have not compensated for efficiency dividend cuts by padding their new policy bids with extra staff. In fact some of the new initiatives such as the Gonski reforms will result in a leaner public service.

It shows the Expenditure Review Committee (the Cabinet committee that examines all spending bids from Ministers in fine detail) has been exceptionally diligent this year. Up until last year’s budget the standard pattern was that the efficiency dividend cut a little and staff associated with new programs added much more, resulting in a net increase.

This budget, as Crikey commentators have pointed out, is remarkably unlike a pre-election budget. Instead of the usual lolly bag of small new programs, it has only a few. New spending is tightly targeted. Some pockets of public service will be affected by the budget, but for the majority it is business as usual. This worries the Coalition, which thinks business as usual includes a build-up of waste and inefficiency. For the next four months though there is little change for the public service.


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One thought on “Public service: $600m in savings, but they won’t feel the pinch

  1. extra

    Let’s be clear about this- it won’t worry the mandarins at all, because they (and the rest of the SES) get under-building parking anyway, along with their car. Those affected will be the bulk of the everyday workers- Executive Levels and ASOs.


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